UPDATE 1-Punk Ziegel, Bear Stearns still bullish on Citigroup
(Adds Bear Stearns' comments, updates share movement)
March 7 (Reuters) - Punk Ziegel recommended investors buy Citigroup Inc (C.N: Cotización), a day after the bank announced moves to overhaul its U.S. residential mortgage business, and said new rumors in the market suggest that the financial giant's capital strength may be greater than thought.
"There has been a leak/rumor ... that Citigroup's Tier One Capital could be at 8.8 percent of assets at the end of the first quarter," analyst Richard Bove said.
He added that if these rumors are true, Citigroup will not take "mammoth" write-offs in the first quarter and that his earnings estimates would also prove to be too low.
Bove also noted that the stock was now selling below expected revenue for 2010 and well below stated book value.
"This is simply ridiculous. Fear has replaced logic. Buy it," he said. Citigroup's shares have fallen by about three-fifths from their 52-week high on May 23.
Bear Stearns' analyst David Hilder also reiterated his "outperform" rating on Citigroup stock.
Hilder said despite difficult capital market conditions, he continues to expect Citigroup and other banks to benefit from the U.S. Federal Reserve's moves to cut interest rates and reverse the slowdown in economic growth.
"Citi, of course, has a fair amount of house-cleaning and reorganization of its own to accomplish in the next year, and its stock may lag those of other banks, such as JPMorgan Chase & Co (JPM.N: Cotización) that began putting their current strategy and discipline in place several years ago," Hilder said. Continuación...