Citigroup has turned itself around and investors in the stock, which has risen around 12 percent in the last 5 days, are likely to make important gains in the long term, Richard Bove, financial strategist at Rochdale Securities, told CNBC Wednesday.
The most important factor in the stock's rise over the past days was Citi CEO Vikram Pandit's testimony to Congress, where "he was just ebullient," Bove said.
Citigroup [C 3.82 --- UNCH (0) ] will be pricing a $2 billion preferred shares offering at $25 par value with a yield of 8.875 percent, traders told CNBC on Tuesday.
One trader said the offering was "multiple times oversubscribed."
Citigroup's balance sheet shows that the bank exceeds all the government's capital requirements, Bove said, adding that the bank has $192 billion in cash, more than 10 percent of its assets.
Pandit has separated businesses to keep and businesses to sell in the bank and this will increase the value of Citigroup, Bove explained.
"If one was able to separate out the business that they're going to sell at the moment … the part that's going to survive has got a 65 cents to 70 cents earnings power, which I think is a $7 stock," he said.
"But you have to go through the sale of the government stock before, I think, it starts to move up even more seriously," Bove added....MORE
Wednesday, March 10, 2010
"Citigroup's Stock Likely to Keep Climbing: Bove" (C)