Monday, March 26, 2007

Citigroup cuts cost

Citigroup may cut 15,000 jobs: paper (Reuters)

People walk past a Citibank branch in New York, February 17, 2007. Citigroup Inc. executives are putting the finishing touches to a restructuring plan that is likely to involve around 15,000 job cuts and a charge against earnings of more than $1 billion, according to people familiar with the matter, The Wall Street Journal reported. (Keith Bedford/Reuters)Reuters - Citigroup Inc. , the largest U.S. bank, may cut 15,000 jobs and take a charge of more than $1 billion to revitalize itself and boost a lagging share price, the Wall Street Journal said on Monday.

C is at 51.72, divergence is positive at 0.2045 after a little time in the negative region.  It was unchanged last Friday, with only 7k volume.  Average volume is at 3million.  P/E is only at 12, but it may mean that the investors have lost confidence on the stock.  Analysts put a buy recommendation to the stock (2.1 average, with 1 being strong buy, and 5 strong sell).  Also, AG Edwards gave it a buy recommendation last March 20. 

Earnings is a concern though.  Hence, the cost cut.  Growth is a concern (-1.8% versus the SP500's 4.2% and its sector's 8.0%).  C's estimate of eps is down by $0.07 from 90 days ago, and is only at US$4.50. 

Given this, and a P/E of 15, we are thinking that C may still trade at 62.50 tops.  Given the jobs cut, and its proven resilience over time, C may still be a buy.

I will give it a 2.5 for a buy. 

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