Deutsche Bank reiterates a Buy rating on Citigroup (NYSE: C) after meeting with the company CFO John Gerspach on Monday. Deutsche has a price target of $5.50 on the shares.
DB's Buy rating reflects progress being made at the firm, Citi's strong capital/reserves, low expectations and an attractive valuation. DB says that Citi didn't seem overly concerned about direct exposure to Europe, the Euro, and/or spillover impact into the capital markets. They see Citi with a reduced risk book in April, reducing the impact of volatility that the market has been exuding over the last one-to-two weeks.
Citi believes that return on assets (ROA) could be 1.25 - 1.50% longer term, depite uncertain regulations that may come about. DB's implied ROA is closer to 1.0%.
- No change in the credit outlook—which is for likely continued improvement;
- Net interest margin may decline for the rest of the year (ex trading impact), slightly worse than we believe some have assumed;
- Further expense reductions seem likely over time;
- There was no update on the gov’t sale of its common stock or trust preferreds...MORE