(Recasts; adds details) June 20 (Reuters) - Ladenburg Thalmann analyst Richard Bove widened his 2008 loss estimate for Citigroup Inc (C.N) and cut his price target on the stock, after the largest U.S. bank said it could have substantial subprime write-downs in the second quarter.
Bove widened his 2008 loss estimate for the company to 36 cents a share from 19 cents and lowered his price target on the stock to $25 from $31.
The analyst said he sees another multi billion write-downs of Citigroup’s super senior CDO (collateralized debt obligations) portfolio, which was marked down by about $6 billion in the first quarter, due to widening of spreads.
On Thursday, Chief Financial Officer Gary Crittenden said the company could take substantial write-downs in the second quarter but would be smaller than those in the first quarter, when it took a total of $16 billion in credit losses and charges. “More marks are expected on the subprime portfolio,” Bove said, adding the $1.5 billion write-down due to the rating downgrades of monoline bond insurers might be matched by a similar write-down in the second quarter.
“Finally, there will be higher losses on the credit card portfolio and these losses will mount all year,” said Bove, who maintained his “buy” rating on the stock based on the improved performance of Citigroup’s core business and positive longer term outlook.
Shares of the company closed down 1 percent at $20.17 Thursday on the New York Stock Exchange. (Reporting by Supantha Mukherjee in Bangalore; Editing by Deepak Kannan)