Photo: Courtesy of Håkan Dahlström on Flickr

Shares of big bank stock Citigroup Inc. (C) are down 16.6% year-to-date and 27% overall in the past year. Given the bank's relatively solid first-quarter earnings report last week, one Citigroup analyst said Sunday that the negative investor sentiment surrounding Citigroup may have finally peaked.

The Analyst: Bank of America analyst Ebrahim Poonawala reiterated his Buy rating and $60 price target for Citigroup.

The Thesis: In his note, Poonawala said Citigroup's earnings beat was reassuring, and the bank's risks tied to Russia and Ukraine seem to be contained. However, he said Citigroup management needs a few more wins before it wins back over skeptical investors.

"Our investor conversations indicate extreme pessimism with regards to the stock outlook, best reflected in the 0.6x P/TBV multiple assigned to the shares," Poonawala said.

Poonawala also raised his 2022/2023/2024 EPS estimates from $5.17/$7.12/$7.38 to $6.80/$7.50/$8.30. At today's share price, Citigroup stock is trading at just 7.7 times Poonawala's 2022 earnings estimate and only 7 times his 2023 estimate.

In addition to its extremely attractive valuation, Poonawala said Citigroup has a compelling capital return story as well. The company executed $3 billion in buybacks in the first quarter ahead of June's stress test results. Poonawala projects $1 billion in buybacks per quarter through the end of 2022 and $8 billion in buybacks in both 2023 and 2024. Citigroup pays an attractive 3.9% dividend as well.

Poonawala said more patience may be required for Citigroup investors given the bank's lack of near-term catalysts, but he said valuation caps downside, and the risk-reward balance is significantly skewed to the upside.

Benzinga's Take: When earnings beats and seemingly irrationally low valuations still don't attract buyers for a stock, it can be very frustrating for investors. However, it's extremely difficult for a company to overcome a reputation as a market laggard, and the tide of negative investor sentiment tends to turn very slowly.

Price Check: Citigroup shares were trading up 3.61% on Monday at $52.76, according to Benzinga Pro.