Financial Winners and Losers: Goldman Sachs

(Updated with final price moves throughout)

Financial stocks finished sharply higher Monday ahead of a week full of earnings reports after analyst Meredith Whitney upgraded Goldman Sachs (GS Quote), offering a bullish outlook for the company.

Whitney, who gained acclaim in late 2007 while at Oppenheimer for foreseeing many of problems in the financial industry, before leaving the firm in February to start her own stock advisory group, raised Goldman to buy, from hold, with a 12-month price target of $186.

Whitney said she expects Goldman Sachs to be the key competitor in some of the unpredictable markets of government, corporate and municipal debt. She expects a "tsunami of debt issuance" from federal/sovereign, state and local governments ramping up debt issuance to fund "woefully underfunded" budget gaps.

"In addition, we expect corporate debt issuance to be at least 60% as strong as peak cycle levels reflecting sizable debt maturity rolls," Whitney's firm said in a research note. "What's more, given fewer players in the market, not only is [Goldman Sachs] benefiting from market share gains on these products but more widely in the derivatives products."

Goldman shares climbed 5.3% to finish at $149.44. Key rival Morgan Stanley (MS Quote) was higher by 7.6% to close at $27.91.

In other analyst moves, Barclays Capital analyst Jason Goldberg trimmed earnings estimates for Citigroup (C Quote) and JPMorgan Chase (JPM Quote), which he said reflects the inclusion of the Federal Deposit Insurance Corp.'s deposit insurance fund assessment, which amounts to 10 cents a share for Citi and 12 cents a share for JPMorgan.