UPDATE: Goldman Sachs Upgrades Credit Suisse (CS) to Conviction Buy, UBS (UBS) Cut to Neutral

(Updated - September 15, 2015 11:02 AM EDT)

Goldman Sachs upgraded Credit Suisse (NYSE: CS) from Buy to Conviction Buy, and downgraded UBS AG (NYSE: UBS) to Neutral. Analyst Jernej Omahen noted banks are entering the final round of their strategic announcements.

Omahen explained, "Past 'strategic cycles' are best described by ambitiously calibrated targets, which were subsequently not met. This time feels different – the CEOs at DBK, CS and BARC are new, and outsiders at the same time. Incentives to persist with previous strategies are low – incentives for sustainable, long-term strategies, high."

"Our positioning ahead of the strategic announcements has changed: we downgrade UBS to Neutral (following a period of strong share price performance), and now prefer CS (remains Buy and added to the Conviction List) and BARC (CL Buy). DBK remains Neutral rated," continued the analyst.

Omahen added, "The new CEOs have changed incentives – justifying past strategies is not one of them. We therefore expect substantial strategic shifts, based on a modest premise: focus on the best, highest-return, businesses. We see this an option as most likely at CS, less so at BARC, and least likely at DBK. Therefore, at CS, we expect ‘vertical cuts’, aimed at rationalising the business, that are focused on business lines and geographies. Whereas at DBK, we expect ‘horizontal’ cuts that are aimed at improving efficiency. The latter are the hardest to achieve."

For an analyst ratings summary and ratings history on Credit Suisse click here. For more ratings news on Credit Suisse click here.

Shares of Credit Suisse closed at $26.27 yesterday.

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