"Overall, Citi remains cautiously optimistic as it is largely through the mark-to-market cycle, nearing the peak of the consumer cycle, and has limited exposure to CRE relative to peers.
Capital position solid: Regulatory standards for capital levels are still unclear; however, Citi’s balance sheet remains strong with more than $50bn of reserves post FAS 166/167 (representing 6.6% of loans) and $118 billion of tangible common equity.
Emerging markets focus: In 2009, emerging markets comprised 46% of total revenues and 36% of the asset base. This should continue to grow over time as Citi is investing aggressively in Asia and Latin America consumer banking businesses.
Expense management to continue: The declining expense base in Citi Holdings should support incremental business investments within Citicorp particularly branch expansion, customer acquisition, and card usage in geographies outside the US.
Maintain Neutral rating: Citigroup has made significant strides improving its capital and liquidity; however, the clarity surrounding the timing of the company’s return to normalized earnings power is less clear given the significant portfolio run-off and elevated credit costs. Our $4.50 target price represents 1.1x year-end 2010 tangible book value per share."From a technical basis, the stock is grinding along $3.75 resistance line which also coincides with 200-day moving average. Again, the longer the stock stays here, the higher the chances the stock will breakout.
As of this writing, the ISE Sentiment Index shows 276,000 calls traded. Almost 55% of them are bought on the offer. Yesterday, the scan was also bullish with 57% bought on the offer.
Citigroup options are cheap and very liquid. I am taking a small gamble and buying straight call options:- Buy to open June $3 call options for $0.76
For more conservative traders, wait for a breakout above $3.80 for full confirmation before jumping in.
Good luck!
