Citigroup Inc. may slump below $30 a share, a drop of 14 percent, as U.S. bank shares extend declines on writedowns that will have a ``severe impact'' on their capital ratios, according to CIBC World Markets Inc. Meredith Whitney, the New York-based analyst who on Nov. 1 triggered a 2.6 percent slide in the Standard & Poor's 500 Index after saying Citigroup may cut its dividend, reduced her recommendation on the biggest U.S. banks to ``underweight'' from ``market weight,'' relative to the S&P 500. ``The optics for the group are not good at the moment, but they are poised to get worse,'' Whitney and Carla Krawiec, also based in New York, wrote in a report to investors today. ``We expect Tier 1 ratios to drop materially in the fourth quarter.'' Among the group of large-capitalization banks covered by CIBC, the analysts have a ``sector underperformer'' recommendation on Citigroup, and ``sector performer'' ratings on Charlotte, North Carolina-based Bank of America Corp. and Wachovia Corp. They have ``sector outperformer'' ratings on JPMorgan Chase & Co. and San Francisco-based Wells Fargo & Co. Citigroup's stock had its steepest retreat since 2002 on Nov. 1 after Whitney said the largest U.S. bank would have to cut its payout or sell assets to make up for losses. The analyst today forecast further declines for Citigroup, saying it may fall ``below $30.'' Thanks Meredith - without you, we would not have an objective observer! Hum...CIBC - anybody any idea how they are rated ????
Credit Ratings CIBC's current debt ratings are listed below. The ratings should not be construed as a recommendation to buy, sell, or hold CIBC debt instruments. Ratings may be revised or withdrawn at any time by the rating agencies. CREDIT RATINGS DBRS MOODY'S STANDARD & POOR'S FITCH SENIOR AA Aa2 A+ AA- SUBORDINATED AA (low) Aa3 A A+ SHORT-TERM DEBT R-1 (high) P-1 A-1 F1+ FINANCIAL STRENGTH / INDIVIDUAL / ISSUER --- B- --- B(1) OUTLOOK Stable Stable Stable Stable
(1) Why can't she just give a "Screaming Sell" rating if she's so bearish? (2) Other banks and brokers will get their CIBC downgrades in order too, after they've put out some short-positions in the stock.
Analyst Coverage The dealers and analysts who cover CIBC's share price performance are listed below: Blackmont Capital Brad Smith BMO Capital Markets Ian de Verteuil CIBC World Markets Darko Mihelic Citigroup Shannon Cowherd Credit Suisse Securities Jim Bantis Desjardins Securities Michael Goldberg Dundee Securities John Aiken Genuity Capital Markets Mario Mendonca Merrill Lynch Sumit Malhotra National Bank Financial Rob Sedran RBC Capital Markets André-Philippe Hardy Scotia Capital Kevin Choquette TD Newcrest Jason Bilodeau UBS Securities Canada Inc. Peter Rozenberg
CIBC World lured analyst Darko Mihelic away from independent dealer Blackmont Capital, where he was the top-ranked analyst in the sector who didn't work for a bank-owned firms. Mr. Mihelic brings the added perspective of a client, as he used to work for mutual fund manager Altamira, along with RBC Dominion Securities. At CIBC World Markets, Mr. Mihelic will cover both the banks and insurers. Blackmont, which has been on a roll of late, is expected to move quickly to fill the position. Having a handle on the financial stocks is critical to the domestic dealer for a number of reasons. Obviously, the banks and life companies make up a big portion of the Canadian market, so clients care about the analyst's calls. But the banks are also relatively volatile, and trade in serious volumes. That means dealers can end up owning large blocks of bank stock in their own accounts, in order to facilitate client trades. Good intelligence is essential to limiting the losses that can come with this so-called liability trading. ;=)
She should have announced this when C was trading above $50 not below $35. Come on, they get paid too much money to guess. Anyone can do that.