Analysts See Better Things to Come From Citigroup (C) Following Reverse Stock Split and Dividend News
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Price: $131.65 +1.53%
Rating Summary:
31 Buy, 11 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
Rating Summary:
31 Buy, 11 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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A number of analysts weighed in on today's news that Citi (NYSE: C) will do a 1-for-10 reverse stock split and reinstate a 1 cent per share quarterly dividend.
Rochdale's Dick Bove said the split "could take 10% off the value on the issue in the next few weeks." However, he is maintaining his Buy rating as the action does not adjust operations. On the dividend, Bove said, "The fact that the Federal Reserve is is allowing the company to pay a dividend in the second quarter is a major plus. It indicates, at the least, that the Fed believes that the company is now solidity on the path to a recovery."
Analysts at Credit Suisse said "While the payout ratio on adjusted EPS is nominal, we would expect an increase in the dividend to a more normalized 20% payout ratio sometime in 2012." They said the reserve stock split may make the shares more attractive to a certain subset of investors. The firm maintained a Neutral rating and $5.75 price target.
On Bloomberg TV, an analyst at Barclays said "symbolic is the right word" for Citi’s move this morning, as it shows government’s handcuffs are off. The analyst sees a more meaningful dividend increase, buyback plan next year. The firm maintained an Overweight rating and $6 price target.
"From a technical perspective, the higher share price has the potential to attract institutional investors that might have been prohibited from owning a stock trading below $5/share", said Credit Agricole's Mike Mayo. "On the other hand, a stock trading around $45/share is likely easier to short than one trading at $4.50. Two other financials with reverse splits (AIG and E-Trade) underperformed the S&P500 following their respective announcements (down 27% on average vs a flattish S&P) and one month after their effective dates (down 24% vs flattish." Mayo has an Underperform rating and $4 price target on the stock.
Shares of Citigroup are down 1.4 percent in midday action to $4.435.
Rochdale's Dick Bove said the split "could take 10% off the value on the issue in the next few weeks." However, he is maintaining his Buy rating as the action does not adjust operations. On the dividend, Bove said, "The fact that the Federal Reserve is is allowing the company to pay a dividend in the second quarter is a major plus. It indicates, at the least, that the Fed believes that the company is now solidity on the path to a recovery."
Analysts at Credit Suisse said "While the payout ratio on adjusted EPS is nominal, we would expect an increase in the dividend to a more normalized 20% payout ratio sometime in 2012." They said the reserve stock split may make the shares more attractive to a certain subset of investors. The firm maintained a Neutral rating and $5.75 price target.
On Bloomberg TV, an analyst at Barclays said "symbolic is the right word" for Citi’s move this morning, as it shows government’s handcuffs are off. The analyst sees a more meaningful dividend increase, buyback plan next year. The firm maintained an Overweight rating and $6 price target.
"From a technical perspective, the higher share price has the potential to attract institutional investors that might have been prohibited from owning a stock trading below $5/share", said Credit Agricole's Mike Mayo. "On the other hand, a stock trading around $45/share is likely easier to short than one trading at $4.50. Two other financials with reverse splits (AIG and E-Trade) underperformed the S&P500 following their respective announcements (down 27% on average vs a flattish S&P) and one month after their effective dates (down 24% vs flattish." Mayo has an Underperform rating and $4 price target on the stock.
Shares of Citigroup are down 1.4 percent in midday action to $4.435.
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