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Should you Exit this Banking Stock – Citigroup

Feb 03, 2023 | Team Kalkine

Read Time :5 min

Should you Exit this Banking Stock – Citigroup

Citigroup, Inc.

C Details

Citigroup, Inc. (NYSE: C) is the global financial services company doing business in more than 100 countries as well as jurisdictions.

Financial Results for the Q4 FY 2022

Citigroup posted net income for the fourth quarter 2022 of USD2.5 billion, or $1.16 per diluted share, on revenues of $18.0 billion. This compares to net income of $3.2 billion, or $1.46 per diluted share, on revenues of $17.0 billion in Q4 FY 2021.
The fourth quarter results included divestiture-related impacts of ~USD192 million in earnings before taxes (~$113 million after-tax), primarily because of the gain on the sale of the Thailand consumer business.
Its operating expenses amounted to USD13.0 billion in the fourth quarter 2022, reflecting a fall of 4%, primarily because of the absence of divestiture-related costs related to the Korea VERP in the prior-year period.

Outlook

Citigroup is expecting revenues in the range of USD78 Bn – USD79 Bn, excluding 2023 divestiture-related impacts. It is expecting expenses of ~USD54 Bn, (excluding 2023 divestiture-related impacts).

Key Risks

The group is susceptible to various risks related to COVID-19 pandemic. Notably, it is also exposed to macroeconomic as well as geopolitical risks.

Fundamental Valuation: Price/BVPS Based Relative Valuation

Stock Recommendation

The stock has been valued using Price/BVPS based relative valuation (on an illustrative basis) and the target price so arrived reflects a decline of low double-digit (in % terms). A slight discount has been applied to Price/BVPS Multiple (NTM) (Peer Average) considering the macro-economic uncertainty as well as geopolitical challenges.

Considering the resistance and target level achievement, current trading levels and risks associated, it is prudent to liquidate at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the closing price of USD52.22 per share, up by 0.13% as on 2 February 2023.

Technical Overview:

Daily Price Chart

C Daily Technical Chart, Data Source: REFINITIV

Citigroup, Inc. (C) is a part of Kalkine’s Global Big Money Product.

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for share price chart and stock valuation is based on February 2, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

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