BofA Cuts Citigroup Target Despite Strong Q3 Print

Recent talks with investors show limited trust in Citigroup Inc C and loss of faith in management, despite solid third-quarter results and a stabilizing outlook for accrual revenues, according to BofA Securities.

The Citigroup Analyst: Erika Najarian maintained a Buy rating for Citigroup, while reducing the price target from $74 to $70.

The Citigroup Thesis: The stock has been battered by investors due to the "lack of clarity on the consequences of the consent order," Najarian said in the report.

She expects Citigroup’s stock to trade “in a tight low $40s range” in the near-term, until the company presents a “credible plan for recovery from incoming CEO Jane Fraser,” which is unlikely until January.

The analyst considers the risk/reward as compelling over the next 12 months, provided Citigroup “avoids more punitive organic business activity restrictions.”

“C will have essentially turned over the lion’s share of its operating committee by early ‘21. We have already been encouraged by a stronger sense of urgency from newer executives like Anand Selva and CFO Mark Mason,” Najarian wrote.

C Price Action: Shares of Citigroup had slipped about 4% in Tuesday's session and were lower by 0.34% to $43.53 at time of publication Wednesday.