UPDATE 2-Analysts cut Citigroup's '08 outlook

lunes 21 de abril de 2008 16:41 CEST

 (Recasts, adds details, Bear Stearns comments)
 April 21 (Reuters) - Citigroup Inc's (C.N: Cotización) lack of earnings
power could put the bank under pressure to cut or eliminate its
current dividend and raise additional capital, said Oppenheimer
& Co analyst Meredith Whitney, as she widened her loss per
share forecast on the bank.
 Punk Ziegel analyst Richard Bove, who forecast a loss for
the bank in 2008, said Citigroup's first quarter had "little to
recommend it from virtually any perspective."
 The largest U.S. bank posted a $5.11 billion quarterly loss
on Friday and said it will cut another 9,000 jobs after
suffering billions of dollars of write-downs.
 Citigroup's investment bank suffered the brunt of its
write-downs, and posted a $5.67 billion quarterly loss, while
profit dropped 45 percent to $1.43 billion in consumer banking,
the company's largest business.
 Four of the 10 businesses will continue to lose money for
the next three quarters as material declines in profitability
are expected in all of Citi's businesses, Whitney said.
 She forecast that the company's U.S. consumer lending
business, international consumer finance, market and banking
and alternative investments divisions would continue to lose
money in 2008.
 On Friday, Fitch Ratings cut Citigroup to "AA-minus" from
"AA," while Standard & Poor's said it might lower its own
AA-minus rating. Moody's assigned a "negative" outlook to its
"Aa3" rating, equivalent to AA-minus.
 Bear Stearns analyst David Hilder, who cut his 2008
estimates on the stock on Friday to reflect higher expected
consumer loan loss provisions, said he expected a steady stream
of sales of non-core assets of the company, going forward.
 Punk Ziegel's Bove said it was likely that the loan loss
provision will stay at an elevated level for Citigroup for at
least another four quarters.
 Bove, however, continued to rate Citigroup a "buy," given
its unique franchise, free cash flow position and efforts at a
turnaround that could be successful.
 "...Large amounts of money + unique franchise will
ultimately get improved execution and large profits." Bove
 Following are the price target and estimate cuts made by
the brokerages on Citigroup:
 Brokerage       Rating       Price target    2008 EPS view   
2009 EPS view
                           New    Old      New      Old    
New     Old
 Oppenheimer     Underperform --     --      -$0.45  -$0.15   
$0.90  $2.50
 Punk Ziegel     Buy          $31    $34     -$0.18   $0.50   
$2.73  $3.57
 Bear Stearns    Outperform   $32    --       $1.00   $1.14   
$3.00  $3.22
 Shares of Citigroup fell more than 3 percent to $24.26 in
morning trade on the New York Stock Exchange.
 (Reporting by Ramya Dilip in Bangalore; Editing by Amitha
Rajan, Jarshad Kakkrakandy)