Financial Winners and Losers: Citigroup

(Adds S&P downgrade of E*Trade, closing stock prices throughout)

Financial stocks were mixed Friday, with Citigroup (C Quote) one of a handful of winners after an analyst called the stock an "excellent buy" for patient investors.

Rochdale Securities analyst Dick Bove initiated coverage of Citigroup with a buy rating and a price target of $4, but warned that new management will face numerous challenges. Citi must return to its core operating strengths, improve its balance sheet so that it can borrow without government aid, and, "in the short run most importantly," it must cleanse the bank of its bad loans, Bove wrote in his research note.

"[Citigroup] is being returned to its core," Bove wrote. "It will be given time to succeed in this effort. This suggests that the outlook for the stock is very positive."

Citigroup shares closed up 1.3% to $3.17. Among other bank stocks, Barclays (BCS Quote) ended 2.7% higher, JPMorgan Chase (JPM Quote) gained 2.4%, and Bank of America (BAC Quote) rose 2.5%, and Wells Fargo (WFC Quote) was higher by 2.1%.

E*Trade Financial (ETFC Quote) was one of Friday's worst performers after the company priced 435 million shares at $1.10 a share. Affiliates of hedge fund Citadel Investment Group, E*Trade's largest equity and bond investor, bought 90.9 million shares. Citadel's purchase brings its common-share stake in E*Trade to 17%.

Following the offering, Standard & Poor's downgraded the company's long-term counterparty credit ratings as well as certain senior debt ratings further into junk territory to 'CC' from 'CCC-'.

E*Trade shares tumbled 11.2% to $1.27. TD Ameritrade (AMTD Quote) finished 1.1% lower at $17.36.