On Wednesday, Oppenheimer adjusted its price target for Citigroup Inc. (NYSE:C) shares, reducing it slightly to $91 from the previous $92, while continuing to recommend the stock as an Outperform. This change comes despite Citigroup's third-quarter earnings per share (EPS) surpassing both Oppenheimer's estimate of $1.43 and the consensus estimate of $1.31, reporting an actual EPS of $1.51.
Citigroup's stock experienced a 5.1% decline at the end of trading on the day of the announcement, which was notably higher than the S&P 500's dip of 0.7% and contrasted with the Bank Index (BKX), which saw an increase of 0.3%. Analysts noted several concerns during Citigroup's question-and-answer session, which appeared to contribute to investor apprehension.
The issues raised included higher-than-anticipated credit card losses, speculation about an undisclosed asset cap on Citigroup, questions regarding the potential 2025 initial public offering (IPO) of Banamex, and the bank's trajectory toward its 2026 expense guidance of $51 to $53 billion, down from this year's $53.8 billion.
Despite the day's stock performance and the concerns mentioned, the analyst emphasized that Citigroup's actual financial results for the quarter were indeed better than expected. The reduction in the price target to $91 reflects a modest adjustment in valuation, while the Outperform rating suggests that Oppenheimer continues to view Citigroup shares favorably in the longer term.
In other recent news, Citigroup reported a net income of $3.2 billion and a 3% year-over-year revenue growth in its recent earnings release. The performance was driven by strong results across all business segments, particularly in services and investment banking.
JPMorgan maintained a neutral rating on Citi, setting a price target of $71.50, while Evercore ISI slightly raised its price target to $64.00.
The bank is also making progress with the initial public offering plans for Banamex, although the process could face potential delays due to the current low valuations of Mexican banks.
Despite regulatory challenges and a letter from Senator Warren suggesting growth restrictions, Citigroup's CEO expressed confidence in the company's operations. The bank returned $2.1 billion to shareholders, including $1 billion in share repurchases, showcasing a solid capital position with a CET1 ratio exceeding the requirement.
These are among the recent developments for Citigroup.
InvestingPro Insights
Recent InvestingPro data offers additional context to Citigroup's financial landscape. The company's market capitalization stands at $118.47 billion, with a P/E ratio of 19.05, suggesting a moderate valuation relative to earnings. Citigroup's revenue for the last twelve months as of Q3 2024 was $69.31 billion, although it experienced a slight decline of 3.69% over this period.
InvestingPro Tips highlight Citigroup's strengths and challenges. The company is recognized as a prominent player in the banking industry and has maintained dividend payments for 14 consecutive years, demonstrating financial stability. This is further supported by its current dividend yield of 3.58%, which may appeal to income-focused investors. However, InvestingPro also notes that Citigroup is quickly burning through cash, which aligns with the concerns raised during the earnings call about the bank's trajectory towards its 2026 expense guidance.
Despite these challenges, Citigroup has shown a high return over the last year, with a one-year price total return of 59.31% as of the data's reporting date. This performance metric provides context to Oppenheimer's continued Outperform rating, suggesting potential for further growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Citigroup, providing a deeper dive into the company's financial health and market position.
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