Citigroup upgraded to 'Buy' by Sterne Agee

Citigroup, with new CEO and cost-cutting, raised to 'Buy' at Sterne Agee

Associated Press

NEW YORK (AP) -- Citigroup Inc. has been upgraded to "Buy" at Sterne Agee, which says the big bank is benefiting from a change in leadership and less fear about Europe's economy.

Sterne Agee analyst Todd L. Hagerman also raised his forecast of Citigroup's 2013 and 2014 earnings.

Citigroup has been roiled in recent months by turmoil at the top, after CEO Vikram Pandit's surprise exit and the appointment of Michael Corbat to replace him, and again last month when Corbat announced plans to cut 11,000 jobs. Once the nation's biggest bank, Citigroup now ranks third behind JPMorgan Chase and Bank of America.

Sterne Agee's Hagerman said the switch in CEOs from the embattled Pandit is a "game-changer" and only the beginning of a restructuring. Citigroup's biggest risk now, he said, is the eurozone, which seems to be stabilizing, and potential volatility for three to six months due to uncertain fiscal policy from Washington.

The analyst raised his forecast of 2013 earnings per share to $4.80 from $4.45, and 2014 earnings per share to $5.40 from $5.

Citigroup's share price has increased by two-thirds since June lows, but Hagerman said they're still a bargain based on what could be a trough in the bank's earnings.

"We continue to believe potential upside in the shares is meaningful given the improving profitability in the various primary business units" and other actions, Hagerman wrote in a note to clients.

Citigroup shares rose 14 cents to $41.39 in morning trading. In 2012, they hit a low of $24.61 in June and ended the year at $39.56.

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