Citigroup Inc (NYSE:C) — As I noted in the Daily Market Outlook, it seems financials like C stock have gotten too cheap to be ignored by investors any longer. The sector rallied Friday, due in part to the better-than-expected jobs report.
Although analysts expect revenues and earnings at this large-cap financial services company to fall this year, they anticipate a turnaround in 2017.
S&P Capital IQ Equity Research, which has a “Buy” rating on C stock, expects earnings will rise to $5.30 per share in 2017 from $4.60 per share in 2016. Its analysts note that the bank’s better-than-expected Q2 results were due in part to loan loss provisions falling $250 million from Q1. They forecast Citigroup will continue to strengthen its global consumer and corporate lending.
Capital IQ has a 12-month target of $52 on C stock. Credit Suisse analysts have a slightly higher target of $55, noting that Citigroup’s credit quality has been consistent and consumer trends remain stable. Its analysts rate C stock “Outperform.”
Turning to the chart, we can see that C stock broke through its long-term bearish resistance line on Friday, which originated in July 2015 at over $60. The breakout occurred on higher-than-average volume as shares sprang from their 50-day moving average at $43.60. That line now becomes initial support on a pullback.
Friday’s high at $45.73 slightly broke the 200-day moving average at $45.71, which is the next resistance. And the breakout also leapt from the bullish flag seen on many of the major indices
Traders should look to buy C stock at $45 with a target of $54 for a potential return of 20%. Citigroup also pays a quarterly dividend of 16 cents per share, for a current forward annual yield of 1.4%, with its next ex-dividend date expected in late October.
