We are upgrading our recommendation on Citigroup, Inc. (C) to Outperform following the final stake sale by the Treasury as it removes the government overhang on the stock. The company s third quarter earnings were 3 cents ahead of the Zacks Consensus Estimate, reflecting an improvement in credit quality and lower loan loss provisions, partially offset by a drop in revenues.
The company s restructuring initiatives are progressing well. However, we believe that the shrinking of its business as a result of assets sale, the CARD Act, Basel III requirements, the Dodd-Frank Act, and other legal/regulatory matters are expected to suppress returns and earnings growth. Nevertheless, the company s core business, Citicorp, remains lucrative.
Citigroup s global footprint is impressive, which we expect would support its earnings and make up for the losses in other areas.
CITIGROUP INC (C): Free Stock Analysis Report
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