Goldman Sachs Reiterates 'CL-Buy' on Bank of America (BAC) and Cuts Citi (C) to 'Neutral'
- Top 10 News for 9/26 - 9/30: Deutsche Bank Soars on Settlement; Twitter Back in the M&A Fray; Nike 'Just Didn't Do It' in Q1
- Wall Street rallies, led by Deutsche Bank, financials
- Viacom (VIAB) Forms Special Committee; Will Explore Potential Combination with CBS (CBS)
- Deutsche Bank (DB) Said Near $5.4B Settlement with U.S. - AFP
- Oil up second straight month on OPEC-fueled rally
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
(Updated - September 16, 2016 8:21 AM EDT)
Goldman Sachs downgraded Citi (NYSE: C) from Buy to Neutral with a price target of $50 ($52 prior). Analyst Richard Ramsden said he favors Bank of America (NYSE: BAC). Its rating was maintained at Conviction Buy and its price target was raised to $19 (from $17).
"Our new analysis gives us increased confidence that BAC can reach 10% ROTCE by 2018 while C will likely continue to fall short of its target," said Ramsden.
The analyst added, "We believe BAC is hitting an inflection point with operating leverage being driven by a combination of low single digit revenue growth, absolute reductions in the expense base, and stable credit. We delve deeper into BAC’s revenue outlook and conclude that top line growth will reach ~4% annually through to 2018, driven by growth initiatives in the consumer bank and wealth management. Importantly, we do not see the expense initiatives impacting revenues given the bulk of the restructuring stems from lower data center costs and continued run off in the LAS portfolio."
Discussing his downgrade of Citi, Ramsden said, "Our Buy thesis had been based on increased visibility into a cleaner stream of earnings and higher capital returns. The earnings inflection has failed to materialize and ROEs are currently well below management’s 10% target at 7.7%. Despite investments in higher return businesses like credit cards, we do not see a path to a meaningful inflection without an improvement in the macro environment. Ultimately, we view this story as centered around capital returns, which we see as a dormant theme until next year’s CCAR process."
Shares of Citi closed at $47.08 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- BMO Capital Reiterates Outperform on Pepsi (PEP) Following Solid 3Q
- Jefferies Raises price Target on Worthington Industries (WOR) to $42 Following Solid 1Q
- UPDATE: Stifel Resumes Infinera Corp. (INFN) at Hold
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Downgrades, Hot Comments, Hot Downgrades
Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs, Citi, Bank of America, Earnings
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!