Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Benzinga
Benzinga
Business
Wayne Duggan

Why Bank Analyst Is Bullish On Citigroup Following CFO Meeting

Citigroup Inc (NYSE:C) shares have lagged the S&P 500 and many of its banking peers so far in 2022, but Bank of America analyst Ebrahim Poonawala said Monday that a recent meeting with Citigroup CFO Mark Mason has him feeling extremely optimistic about the stock's outlook.

Poonawala said Citigroup has a large-scale, globally diversified business, and Citigroup management is well aware that it needs to earn and maintain investor credibility.

Related Link: How To Play Bank Stocks Now That Interest Rates Are Rising

For now, Poonawala said Citigroup's near-term results will likely be noisy thanks to the macroeconomic backdrop of rising interest rates, capital market volatility and a slowdown of mergers, acquisitions and IPOs. In addition, Citigroup also has $9.8 billion in assets with exposure to Russia.

Despite the unpredictable market, Poonawala said Citi management will continue to focus on de-risking the bank and maintaining its commitment to returning capital to shareholders.

How To Play It: Ultimately, this de-risking process will create better EPS visibility for investors over the next 12 to 18 months, which Poonawala said could be a positive catalyst for the stock. During that time, Poonawala said announced business exits will unlock capital for buybacks, and Citigroup should make progress on addressing its regulatory consent order.

"At 0.7x P/TBV, sub-9x P/E (3.6% dividend yield) the stock offers an attractive risk/reward to add exposure to a self-help story that is less macro dependent and where investor sentiment is weak," Poonawala said.

Bank of America has a Buy rating and $90 price target for Citigroup's stock.

Benzinga's Take: For the most part, Citigroup shares have shown no signs of life for the past five years, so it's understandable that investors are hesitant about the stock or its management. However, with a forward earnings multiple of just 7.3, the stock's valuation may provide downside support.

Photo: Courtesy of Håkan Dahlström on Flickr

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.