Nomura Securities Cuts Price Target on Citigroup (C) to $57 Following 2Q EPS Beat
Nomura Securities maintained a Buy rating on Citigroup (NYSE: C), and cut the price target to $57.00 (from $62.00), following the company's 2Q earnings report. EPS was reported at $1.24, ahead of the Street's $1.10 estimate. However, an updated commentary suggests that consensus forecasts are too high for 2H16 and 2017, placing pressure on shares.
Analyst Steven Chubak commented, "Citi reported 2Q adjusted EPS of $1.24, exceeding both our $1.11 and cons. of $1.10. Versus our forecast, the beat was largely driven by lower credit costs and (to a lesser extent) better revenues in Citicorp, notably FICC / DCM; this more than offset higher Holdings expense. Despite the strong beat, shares underperformed peers modestly (down -30bps vs. -10bps for Universals) as updated outlook commentary suggests cons. forecasts are too high for 2H16 / 2017. We cut our out-year estimates to reflect updated guidance and lower rate expectations (no hikes through 2017); TP moves to $57 from $62 on EPS cuts, as well as changes to our valuation framework to reflect the impact of G-SIB surcharge inclusion in CCAR. Despite negative revision risk, with shares trading at ~70% TBV, risk / reward still appears compelling, in our view."
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Shares of Citi closed at $44.33 yesterday.