3 Goldman Euro Bank Upgrades

NEW YORK (TheStreet) -- Goldman Sachs' European equities research team recently added three banks as recommendations to a sector list the strategists argue will benefit from improving creditworthiness in the "peripheral Eurozone," a term used to refer to Portugal, Ireland, Italy, Greece and Spain.

Goldman's strategists further argue banks are "one of the least expensive sectors in the market and the trade-off between their growth prospects and earnings in the next few years looks especially attractive," according to a Feb. 3 report.

Goldman already had a positive view on global European banks, but was more bearish on domestic retail banks, especially in the periphery.

"We believed that the global banks (large by market cap) were better positioned in terms of balance sheet strength and also had diversified revenue streams that enhanced the prospects for loan growth. In general, domestic retail banks, meanwhile, have weaker balance sheets and faced mature end markets that were de-leveraging," the report states.

In the U.S., Goldman's bank analysts recommend Citigroup (C) and JPMorgan Chase (JPM) among large-cap bank names and Huntington Bancshares (HBAN), Banco Popular (BPOP) and East West Bancorp (EWBC) when it comes to regional bank stocks.

As for Goldman's European analysts, they already had buy ratings on several stocks, including Swiss bank Jules Baer, Sweden's SHB, Spain's BBVA , France's Societe Generale, and Belgian-based lender Dexia. They also had conviction buys on Erste Bank in Austria, France's BNP Paribas, and U.K.-based HSBC (HBC) and Lloyds Banking Group (LYG).

However, they suspended ratings and price targets on Allied Irish Banks (AIB) and the Bank of Ireland (IRE) citing "limited visibility over the banks' fundamentals, pending reforms of the financial sector and macro recovery outlook."

Goldman's European bank analysts also got more bullish on three stocks in a sector outlook published at the start of the month. Here are those stocks.

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