UBS Reiterates Buy on Citigroup (C) Following 2Q Report - PT to $53
UBS reiterated a Buy rating on Citigroup (NYSE: C), and cut the price target to $53.00 (from $54.00), following the company's 2Q earnings report. Citi's NIM should recover to 290+ bps in 2H16 due to 3 bps of uplift from Costco and a normalization of cash balances. The Costco portfolio closed in June and the $10.6 billion portfolio had already grown to $11.3 billion and added 337k new accounts by month-end.
Analyst Brennan Hawken commented, "Despite uncertainty in the UK, an upcoming US presidential election, and other macro headwinds, Citi's outlook remained constructive. Citi's NIM should recover to 290+ bps in 2H16 due to 3 bps of uplift from Costco and a normalization of cash balances. In Asia Card, credit appears stable and revenue is still on track to resume growth this year. In US Card, Citi continues to invest and expects revenue growth there in 2H16. In credit, GCB remains stable (not going down the FICO spectrum like some peers) and has shown no signs of deterioration while in ICG the company has seen little stress outside of energy and expects lower credit costs in 2H16 than previously indicated. Citi also noted that capital markets remain open and activity has not slowed. Lastly, Holdings continues to shrink and has agreements to sell another $7 billion in assets."
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Shares of Citi closed at $44.33 yesterday.