Citigroup: Pick Of The Decade

Summary

• BoAML made Citigroup the "Pick of the Decade".
• The large bank trades at only 8.6x conservative 2021 EPS estimates of $9.28.
• The bank offers the potential for a 12% net payout yield even as the stock reaches the low $80s. 

Over a week ago, BoAML picked Citigroup (NYSE:C) as the "Pick of the Decade". Considering Bank of America (NYSE:BAC) and Citigroup compete in the banking space, investors should find the call very intriguing. My investment thesis has remained bullish on Citigroup for a while now, but the call actually shows how tepid the market is on the stock, considering the limited stock gains predicted by the analysts.

Image Source: Citigroup website

Pick Of The Decade

The BoA analysts argue that Citigroup trades at a discount to other money center banks, but such a scenario isn't anything new. The odd part is the big pick only has an initial price target of $92 or a P/E multiple of 10.5x. A stock gain of ~14% isn't reflective of a top pick for the next decade.

Citigroup $C

Bank of America analysts call it their "Pick of the Decade"

Looking for it's valuation to play catch-up to it's money center banking peers.@cnbc pic.twitter.com/PVwQcguhQd

— Dominic Chu (@TheDomino) January 9, 2020

The analysts even make a case for the stock reaching $100 or the equivalent of nearly 25% upside. The odd part is the suggestion that Citigroup would still trade at a 13% discount to the peer group. Again, this call by BoAML isn't all that exciting when one gets down into the details.

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