Updated from 10:22 a.m. EDTMorgan Stanley ( MS) and US Bancorp ( USB) were upgraded , while American Express ( AXP) saw its rating cut to a sell by Goldman Sachs in a banking industry note Wednesday. Goldman upgraded Morgan Stanley to a buy rating from neutral, based on the fact that the company is well positioned because of its "high capital position, reasonable valuation and leverage to improvement in the capital markets," the note says. The analysts also increased their 12-month price target by $6 to $27 a share. Morgan Stanley's tangible common equity ratio is 4.4% -- the highest among large-cap banks, according to the Goldman analysts. "Moreover, unlike banks, the majority of its balance sheet is marked to market, which makes current tangible book more realistic and stable," the analysts write. "Although it remains unclear how the stress test will apply to Morgan Stanley's securities portfolio, we believe mark-to-market institutions will compare favorably to held-to-maturity banks." Morgan Stanley appears to be well positioned to pay back the funding it received from the Troubled Asset Relief Program, or TARP, the analysts note. Goldman also says that as activity in the capital markets stabilizes, such as improvements in debt issuance, and Morgan's ability to gain market share from current market dislocations, the firm's earnings should improve. In addition, the joint venture Morgan Stanley agreed to with Citigroup's ( C) Smith Barney should enhance its deposit gathering capability. The analysts now expect the firm could make $1.80 a share this year, up 30 cents, and $2.70 a share next year, up 20 cents.