NEW YORK (TheStreet) -- Shares of Bank of America (BAC - Get Report) are rising in early trade after the stock was upgraded to Buy from Neutral this morning by analysts at Goldman Sachs.

WHAT'S NEW: While the litigation and regulation concerns that have depressed the stock multiples of big banks are not fully resolved, large U.S. banks have shifted into higher-multiple business lines and seen their underlying EPS volatility drop significantly, wrote analysts at Goldman led by Richard Ramsden. In particular, Bank of America has transformed its business, but that transformation has been overshadowed by its legal issues thus far.

However, with many of its legal problems now resolved, the firm believes investors will begin to focus on the meaningful shift the bank has made in the proportion of its earnings that now come from higher multiple businesses like wealth, asset management and investment banking. Though large-cap banks will likely continue to face a higher bar on returning capital than smaller, regional banks, the gap between their dividend yields and those of regionals should still narrow given their lower valuations and the significant room available to the big banks before hitting the Fed's dividend cap, the firm added. Goldman expects Bank of America will be able to offer investors a 3% dividend yield by 2016 and thinks the bank will make more progress than the market expects in hitting its long-term term target of $2 in earning per share and a 1% return on assets over the next 24 months. In addition to upgrading the stock, the firm raised its price target on the shares to $19 from $17.

PRICE ACTION: In morning trading, shares of Bank of America rose 30c, or 1.9%, to $16.32.

Reporting by Jason Keil

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