Investing

Wells Fargo's Mike Mayo says he's 'all in' on US bank stocks, upgrades Morgan Stanley 

Key Points
  • Wells Fargo's Mike Mayo upgrades Morgan Stanley to outperform from market perform.
  • Mayo increases his 12-month price target on the bank to $60 from $56.
  • The outspoken analyst now has buy ratings on Morgan Stanley, Goldman Sachs, Citigroup, J.P. Morgan Chase and Bank of America even as the share prices struggle.
Wells Fargo upgrades Morgan Stanley to outperform
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Wells Fargo upgrades Morgan Stanley to outperform

A widely followed financial analyst upgraded shares of Morgan Stanley on Wednesday and said he's now bullish on every big U.S. bank.

"We reiterate our bull case on the largest US wholesale banks and now recommend 5 of 5 with an upgrade of Morgan Stanley from market perform to outperform," Wells Fargo's Mike Mayo said in am investor note titled "All-in on U.S. Global Banks."

"Long-term, MS has evolved its business mix more than any other large bank with an increase in wealth and asset management to 1/2 the firm from 1/3 earlier this decade," Mayo said.

The long-time analyst known for his tough questioning of executives — and for a time, bearish view of the sector — raised his price target for Morgan Stanley to $60 from $56. Morgan Stanley shares closed Tuesday at $44.52 and were little changed in premarket trading on Wednesday.

Bank stocks have struggled lately even with interest rates rising and the firms reporting strong results. Morgan Stanley's third-quarter earnings topped the Street last week as investment banking revenue climbed.

"Results this year and in 3Q18 reflected better than expected trends in trading, wealth and investment management, and revenues," Mayo wrote.

Yet Morgan Stanley shares are down 8 percent in the last month and 15 percent in 2018.

Mike Mayo
Adam Jeffery | CNBC

Mayo now has buy ratings on Morgan Stanley, Goldman Sachs, Citigroup, J.P. Morgan Chase and Bank of America. All those stocks are down for the year.