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Sep 20th, 2009 20:15 |
其实C让分析师们也够头痛的:
September 17, 2009 6:01 PM EDT
Is Rochdale Securities' banking analyst Dick Bove losing it? This man is all over the place on Citigroup (NYSE: C). On one hand he thinks the stock can go to $15-$16 on "normalized" earnings of $1.23 per share, on the other hand he says the stock is worth $5.
It is our option that Mr. Bove is making questionable comments about the earnings power, the stock price and the government stake.
First on the earnings power. If Citi earned $1.23 per share they would have to be making about $30 billion a year in "normal" profits, based on the 23 billion shares outstanding currently. Putting $30 billion in profits in prospective - Exxon Mobil (NYSE: XOM), the most profitable company in the world, only earned $45 billion in 2008 when gas prices were sky high. Microsoft (Nasdaq: MSFT), another very profitable company, earned $14.6 billion in 2009. On a comparable basis, JP Morgan (NYSE: JPM) earned just $5.6 billion in 2008 and $15.4 billion in 2007. Bank of America (NYSE: BAC) earned $15 billion in the 2007 go-go days. Citi itself earned just $20.4 billion in the go-go days of 2006. Currently Citigroup is losing money hand-over-fist, is still on the hook for billions more in TARP which it is paying hefty interest on, and is shrinking its business and leverage. So how in the hell is Citigroup going to earn $30 billion? This may not happen in my lifetime.
The market cap of Citigroup if it traded at $15-$16 per share would be $345-$368 billion. Again to put this in perspective. JPM's market cap is $177 billion. XOM's is the highest at $335 billion. So in others words, Citigroup would be the most valuable stock in the world. Give me a break!
In addition to these questionable comments on the earnings power and stock price, Bove may be spreading a misinterpretation of CEO Vikrim Pandit's comments about the U.S. government's new 7.7 billion common shares. In today's note on Citigroup, Bove said that Pandit's comments from yesterday's conference suggests that the U.S. will not be selling its stake for some time. This could not be further from the truth. Pandit clearly said that the government has no restriction on their stock and may sell at any time. How in the hell did he get his interpretation?
Bove's comments on Citigroup are nothing short of reckless.
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