Citigroup Inc (NYSE:C) — This large-cap financial services company provides a wide selection of financial products to corporate and consumers in over 100 countries. Although revenues and earnings fell slightly last year, Standard & Poor’s projects that Citigroup will achieve its global and domestic goals in consumer and corporate lending.
The bank’s plan of cutting expenses could also result in returning significant levels of capital to shareholders. They therefore project that C will earn $5.29 in 2017, up from $4.74 in 2016, and expect EPS of $5.90 in 2018. They have a “four-star buy” on the stock with a price target of $66. Revenues, earnings and thus their price target may be too conservative at just 12.5X their 2017 EPS, which S&P admits is “slightly below peers.”
This undervaluation may be due to challenges in China and the impact of Brexit, but the analyst’s opinion is that C is strong and can weather these headwinds.
In November, Citigroup broke from an orderly bull channel on very high volume. The stock breakout was supported by a reliable long-term indicator, a golden cross (50- day crosses through the 200-day moving average), which occurred on September 8. The breakout resulted in a 10-point rise from $52 to $62 late in December.
Since a small double top at $61.94, a bullish “W” has formed. A break through the resistance line at the top of the “W” should result in a rise to at least $68. Therefore traders may find that buying C under $61 with a target of $68 could bring a relatively quick return of 11%-plus. Long-term investors should hold their prior position for a greater extended gain.
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