Meredith Whitney turns bullish on Goldman
All eyes are on Goldman Sachs (GS), which announces earnings tomorrow. What goosed the stock…and then the banking sector and then the entire market today? Meredith Whitney’s upgrade.
It mattered–and helped send Goldman up nearly 5% to $149–because the famously bearish financial-services analyst, who helped bring down Citigroup and the banking sector two years ago, has been negative ever since. She announced her upgrade of Goldman at 2:24 a.m. At least that’s when the email from her company, Meredith Whitney Advisory Group, popped into my inbox this morning. This is Whitney’s first upgrade since she broke away from Oppenheimer in February to go on her own. It’s also her only “Buy” rating among eight stocks she follows.
So yes, Meredith Whitney finally turned…on one stock only. Don’t dare call her a bull on the market. She says in today’s Goldman report that her positive outlook “is deeply rooted in our sustained bearish stance on the U.S. economy and state of U.S. financials at large.”
She likes Goldman because she’s predicting “a tsunami of debt issuance” from federal, state, and local governments to shore woefully underfunded budgets. That, plus a surge in corporate debt issuance (to at least 60% of peak cycle levels, she says) will benefit Goldman, which along with Morgan Stanley (MS) is the last Wall Street giant standing. Survival of the fittest, precisely. The weak fall and the strong get stronger.
As for Whitney, she’s showing her muscle. Last week here at Fortune, we were talking about her as we began to assess the crop of candidates for this year’s Fortune Most Powerful Women in Business list, due out in mid-September. Last year Whitney ranked No. 35 on the list. We were wondering if she’s still got her mojo. Guess she does.
P.S. Whitney has sells on three stocks: Wells Fargo (WFC), Capital One (COF), and Citigroup (C).
People responded to Whitney because of her past reputation and because they desperately want to find reasons to be bullish. But she is quickly becoming a has-been. She’s no longer telling us anything we don’t already know. Shouldn’t such a high profile financial stock analyst be the first to identify buying or selling conditions. She’s become more like the rating agencies that seem to be reacting to what’s already happened, rather than identifying potential early. She seems to have forgotten the difference between current profitability and future profitability (isn’t that what drives changes in stock prices)? She’s being proven wrong and slow to react, and needs to get her head out of the sand. I’m certainly glad I’ve been ignoring her since March.
Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself. Today Banking Business has grown very much.
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Patricia Sellers has written some of Fortune's most talked-about cover stories, including "Can Meg Whitman Save California?", Melinda Gates ("The $100 Billion Woman"), "MySpace Cowboys," Martha Stewart ("I cannot be destroyed"), Ted Turner ("Gone with the Wind") and Oprah Winfrey ("Oprah Inc."). And she has broken ground with insightful pieces on career management issues such as ego ("Get Over Yourself!"), and "Charisma: Do You Need It? Can You Get It?" Pattie chairs the annual Fortune Most Powerful Women Summit, the preeminent gathering of women leaders in business, philanthropy, government, academia, and the arts. And she has helped oversee Fortune's "Most Powerful Women in Business" cover package since its launch in 1998. She started at Fortune in 1984, covering the big consumer brand companies.
Jessica Shambora started with Fortune as a reporter in June of 2008, following a stint as assistant editor at Travel+Leisure Golf. Shambora has written for Sports Illustrated, SI Latino, Women's Health, and Triathlete. She is a frequent contributor to Postcards. 
Now, what would have been impressive is if she had declared a “buy” rating for Goldman back when it bottomed out at 52$ a share in Nov. 2008
She’s just throwing darts at a board like most analysts.