Monday, March 22, 2010

"Bove on Citigroup: Buy" (C)

As we repeated in our March 10 post "At AIG, What Is Left to Sell?" (AIG)"':
Of the government owned ventures (GOV's), Citigroup is the standout. AIG could sell every asset they have and not come up with enough cash to repay the federales. Fannie and Freddie are dead without the cash transfusions from the Treasury....
Here's the latest, first up MarketBeat:
Citigroup shares are up after Rochdale’s Dick Bove upgraded the bank to buy from neutral, saying long-term factors outweigh worries about the government’s eventual sale of 7.7 billion Citi shares. Among the positives Bove cites: Citi finds itself in the position of having too much liquidity. “This gives management the flexibility to off-load the problem operations and to support longer term growth,” he writes. “It will be a money making machine again and the stock is long-term cheap.” Bove also hiked his price target for Citi to $5 from $3.75.
Research Recap has a bit more detail:
Rochdale Securities analyst Dick Bove today upgraded Citigroup (C) to Buy from neutral and raised his price target to $5 from $3.75. In his research note, Bove cited an improving loan loss situation and the bank’s over-capitalized position, which gives management the flexibility to off-load the problem operations and to support longer term growth. (TheStreet)

In an interview with Street Insider’s Henry Blodgett on Tech Ticker last week, Bove said that now that the company has shed its non-core businesses, he is convinced the Citicorp unit is poised to earn 70 cents a share and that Citigroup could trade at about $8.50 in the next few years, once the government sheds its holdings.

Bove reminded viewers that Citi has now rather-effectively shed assets and will be left with just a few core businesses:

  • a unit which services large corporations around the world
  • an international credit card division
  • a capital markets division and
  • numerous retail banks in New York City

However, Oppenheimer analyst Chris Kotowski sounded a note of caution about Citigroup’s potential in a March 11 note.

“Between (the) struggle for profitability and the overhang of government ownership, we think the upside in the stock is for the time being capped at tangible book value, which we calculate on a pro-forma basis at $3.91.”

See our latest Research Roundup on Citigroup here.

Previously:
"Citi-Bull Sheds Just Under a Quarter Million Put Options" (C)

"Citigroup CEO Pandit Expected to Say Citicorp Could Earn $20 Billion By 2012" (C)

"Citigroup's Stock Likely to Keep Climbing: Bove" (C)

Who Scores Big on a Move in Citigroup? John Paulson, Bruce Berkowitz, George Soros; the usual suspects

Citi Up 7% on Treasury’s Exit: Should You Buy? (C)

"Citigroup: ‘Shares no Longer Toxic?’ and Smart Money Buying?" (C; AIG; FNM; FRE)