Oppenheimer Cuts Price Target on CIT Group (CIT) to $48; Reiterates Outperform
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Oppenheimer maintained an Outperform rating on CIT Group (NYSE: CIT), and cut the price target to $48.00 (from $49.00). On October 6, the company announced the sale of its aircraft leasing business to Avolon Holdings for $3.9B. If all the proceeds were used to buy back stock at the current share price, it would be enough to retire 44% of the shares outstanding. At the current share price, TBV would be ~$48 post repurchase.
Analyst Chris Kotowski commented, "A few months ago, a client commented that if investing were like Olympic diving, then one could get a lot of "degree of difficulty points" for following CIT, but it isn't and that CIT was just a headache. We have felt the same on many occasions, but still think that one can, in Apollo CEO Leon Black's words, "identify opportunity by embracing complexity." For a relatively modestly sized company, CIT does indeed bring a lot of complexity and difficulty, but here is the opportunity in a nutshell: CIT has underperformed, but trades at just ~+/- 80% of pro forma TVB, and the company has just sold one of its lesser performing businesses for ~1.2X TBV."
Shares of CIT Group closed at $36.48 yesterday.
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