Rochdale Securities upgrades to buy from neutral

Goldman Sachs Group was upgraded Thursday by Rochdale Securities analyst Richard Bove amid a belief the bank "has solved its capital and cash flow challenges." Bove upgraded Goldman to buy from neutral and increased his price target to $152 from $142.

"The company appears to be using the most conservative valuation techniques of any bank in the country," Bove wrote in a research note. "This implies asset write-ups in the future."

Many major banks have taken steep write-downs on investments, cutting the value of their holdings by hundreds of billions of dollars. If the value of those investments recover, the banks will be able to reverse the charges and reap large gains in future quarters.

The New York-based bank reported better-than-expected first-quarter profit earlier in the week as fixed income revenues surged. Goldman's trading revenues are likely sustainable and investment banking and investment management revenues could also rise, Bove said.

On Monday, Goldman said it earned $1.66 billion, or $3.39 per share, during the first quarter, beating the $1.64 per share forecast of analysts polled by Thomson Reuters. The bank then completed a $5 billion stock sale Tuesday [priced at $123 per share] as part of a plan to help repay the government $10 billion in bailout money it received as part of the Treasury Department's bank investment program last fall.

Bove said the stock sale was unnecessary and only dilutes current shareholders, noting the bank had enough excess capital to repay the investment if wanted to get out from under increased government regulations, such as limits on executive compensation. However, the stock sale demonstrated the strength of Goldman as it has been essentially impossible for banks to raise capital through stock sales in recent months. The sale also helps bolster the bank's capital ratios, Bove noted.

By paying back the government funds, Goldman will be able to spend money on executives that will help it retain and attract top talent, and it also allows Goldman to participate in purchasing distressed assets as part of the government's public-private investment program, Bove said. Goldman has a strong history of investing in distressed assets and could take advantage of the program to add to future profits, he said.

Landstar System (LSTR)

Baird downgrades to neutral from outperform

Baird analyst Jon Langenfeld says Landstar's $0.27 first quarter EPS was below the consensus forecast. He says while pricing pressures accelerated, the rate of volume deterioration has stabilized.