Monday, June 7, 2010

Analyst Audit: Dick Bove of Rochdale Securities on Citigroup (C)

From Research Recap:
Widely followed for his calls on U.S. banks and the financial sector, outspoken Dick Bove of Rochdale Securities continues to be bullish on Citigroup (C), and he now says the stock should be “aggressively bought” after the firm announced it would further downsize and restructure its consumer finance unit.

Some analysts disagree with Bove about the potential upside of Citi’s stock and the overall value of the company, so what does Bove’s track record tell us?  We went back and searched Alacra Pulse to see how his forecasts have played out.
Bove is expecting Citi’s stock to go up about six times by 2015 to $24.95. He  says that its shares are currently selling at a “slight discount” to its tangible book value, which Bove calculates at $3.99 a share. (TheStreet).  Bove recently got some support for his argument from UBS, which noted that Citi was trading at 0.75 times book, or 70% below an average 15-year level. And last week Credit Suisse estimated  the big banks on average were 40-50% undervalued.
CitiFinancial North America may be worth $3.6 billion once the delinquent loans are pushed out, and Citigroup has already written down many of the loans, Bove points out. (Bloomberg)
In 2005, Bove wrote a report called ”This Powder Keg Is Ready To Blow,” which Dan Freed of said gives him a legitimate claim to stand alongside that select group of stock pickers credited with having foreseen the banking crisis of 2008.
Then fast forward to January 2010, Bove upgraded Citi’s stock to “neutral” from “sell” despite weaker than expected earnings, and kept his price target for the bank at $3.75....MORE

As I said in May's "Why Oppenheimer Now Hearts Citi" (C):
All this Citi love is turning into a damn orgy.*
*Within the last five days:

"Citigroup, Bank of America Up Six Times by 2015 Says Dick Bove" (BAC; C)

Qatar wealth fund keen to buy U.S.'s Citigroup shares: report (C)

"Goldman Analysts Upgrade Citi to ‘Buy" (C; GS)

"Goldman Now Shorting Citi As It Upgrades Vikram's Insolvent Ward Of State To Buy, Puts Jefferies On Conviction Sell" (C; GS)

"Why Goldman Slapped ‘Buy’ on Citi" (C)

"Raymond James Starts Citi (C) at 'Strong Buy', Sets $5.50 Price Target" (C)