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3 Goldman Euro Bank Upgrades

1. Sarasin & Co. (BSAN.S)

Goldman's analysts added the Swiss bank to their conviction buy list Feb. 1, raising their target price on Sarasin by 20%, while lifting earnings expectations for 2010, 2011, and 2012 by 15% 11% and 14% respectively. The main driver of the estimate change is a view that Sarasin did a better job than peers at both gathering assets and earning returns for clients. Sarasin is set to report second half results for 2010 on Feb. 24.

They call Sarasin a "pure-play private banking story, with strong volume growth thanks to inflows from emerging markets," noting it has limited 'exposure "old money" from European offshore banking.' They argue Sarasin is "one of the five banks offering the highest volume growth in our European coverage."

Goldman also believes Sarasin's profit margins should hold up well and possibly improve. "Sarasin's pretax profit margin has been resilient thanks to growing volumes, allowing the bank to contain the effect of falling top-line margins. As a result, continued volume expansion should result in strong profit growth. Net interest margins, as well as normalization of noninterest income (putting more of the recent net new money to work) should lend support to top-line margins," the report states.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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