2022-12-15 • Updated
Citigroup (CITIGROUP) will release its earnings report on July 15, before the market opens. Analysts expect an EPS of $1.67 per share and total revenue of $18.04 billion. Should you buy the stock?
Citigroup is an investment banking company providing financial services for institutional investors and retail customers. It has around 228 000 employees and a market capitalization of $88.36 billion. After the covid crash in March 2020, the stock had difficulties returning to normal. More to say, the share price didn’t beat the pre-covid high of $83.11.
Citigroup reported 1st quarter 2022 earnings of $2.02 per share on revenue of $21.5 billion. The consensus earnings estimate was $1.74 per share on revenue of $18.5 billion. Revenue fell 1.1% compared to the same quarter a year ago. However, high EPS (a 41.5% increase) was a bullish sign for the stock. After the report, the stock gained 11% before a slide lower.
Since Jane Fraser took over as CEO of Citigroup in early 2021, the bank has been working on a multi-year transformation plan to correct regulatory issues, modernize parts of the bank, and try to boost returns, which have disappointed for years. The bank is working to sell its consumer-banking department in Russia but cannot do so because of the Ukraine invasion. Also, the bank performed badly in the Federal Reserve’s annual stress testing. That means the bank will face higher regulatory capital requirements in 2023.
As the transition won’t end until 2023, the bank is actively trying to cut poorly-working parts and invest in promising technologies.
First, Citigroup sold its Mexican division, Citibanamex, to free up some capital and potentially lower the regulatory capital requirements. Although it was a profitable unit, Citi is focusing on long-term growth, not urging for instant gains.
Second, analysts have been cutting EPS estimates for most of the six biggest US-based banks but not for Citigroup. The bank EPS expectations rose by 0.8%, followed by JPM with a 0.35 decline. Risks are pretty low for the bank and will likely decrease in the future.
Third and last, Citigroup entered the crypto world and started to invest in metaverses and decentralized applications. I’m a crypto enthusiast and sure that cryptocurrecy inestments will pay off in the future. Moreover, when the fifth-biggest bank in the US makes its move, it knows what it’s doing.
The 23 analysts offering 12-month price forecasts for Citigroup Inc have a median target of 58.00, with a high estimate of 81.00 and a low estimate of 39.00. The median estimate represents a +27.50% increase from the last price of 45.49.
As for the chart, both mid-term and long-term analyses are in tandem with analyst expectations. We see multiple divergences on the RSI and the price is close to the support trendline (yellow). The daily chart hints about a soon reversal. The question is: how soon will it happen? Even if the earnings report is worse than expected, the stock should hold above the trendline to soar.
Citigroup daily chart
Resistance: 52.00, 60.00, 80.00
Support: 40.00
The weekly chart is even better than the daily one. Look at the RSI. The mid-term reversal happens every time it goes to the level of 25.00 and lower. The long-term bullish trend hasn’t been broken yet, and we expect Citigroup to reach the level of $80.00 per share (a 76% upside).
Citigroup weekly chart
Resistance: 60.00, 80.00
Support: 40.00, 32.00
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Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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