Is Citi Worth $5.60? Or $56 Soon? (C, GS, BAC)

May 4, 2011 by Jon C. Ogg

UBS Securities has failed to make a dent in the price of Citigroup, Inc. (NYSE: C) today, despite a positive research call in the banking sector.  The Swiss bank issued a Buy recommendation on Citigroup,  but more importantly gave it a $5.60 price target.

What is interesting about this research call is that this is literally days ahead of a reverse stock split where Citigroup will split its shares by a factor of 1:10, implying a $45.00 price next week if the shares remain static.  That would imply a $56.00 price target objective post-split.  Many traders love to short sell reverse-split stocks.

When we reviewed Citi’s earnings report we saw that it was trading under its implied book value per share and its tangible book value per share.

One of the strengths listed was Citigroup’s strong position internationally.  If Citi reaches the $5.60 price target it will be a new year high as the 52-week trading range is $3.53 to $5.15.

UBS initiated Goldman Sachs Group Inc. (NYSE: GS) also with a Buy rating and a $200.00 price target, but Bank of America Corporation (NYSE: BAC) was given a very cautious call with a Neutral rating and a $13.50 target due to pressures inside the bank despite Bank of America trading at or under book value.

JON C. OGG