Citi, Down 95% in 5 Years, Is Analyst Favorite (Update 1)

Updated with Citigroup's closing price on Monday.

NEW YORK (TheStreet) -- Bank of America (BAC) touched a new post-crisis low on Monday, but Citigroup (C) has the dubious distinction of having shed the most value among the big banks in the last five years.

The stock -- trading near $25 -- is down 95% from a reverse-split adjusted close price of $498. Bank of America (BAC) isn't far behind, with a decline of 90%.

Both stocks significantly underperform the KBW Bank Index, which itself has tanked 68% over the five-year period as the financial crisis deepened.

JPMorgan Chase (JPM) and Wells Fargo (WFC), the healthiest banks to emerge out of the crisis, have lost about a third of their value.

Yet Citigroup is topping the list of analyst picks for 2012. On Monday, Credit Suisse analyst Moshe Orenbuch recommended JPMorgan and Citigroup as among banks "positioned to be most successful in terms of bottom line earnings growth" because they can "grow loans, effectively manage expenses and deploy capital."

18 out of 26 analysts rate the stock a buy or outperform, according to data from Thomson Reuters. Five analysts maintain a "Hold" rating while three analysts have an "Underperform" or sell rating on the stock.

Some of the bullishness stems from expectations that Citigroup will step up its payout of dividend in 2012 as it gets closer to achieving its capital ratio targets under Basel 3 and is set to generate significant excess capital over the next couple of years.

Citigroup's strong emerging market presence has also been considered a strength as opportunities to grow loans in U.S. and Europe remain limited.

And Citigroup CEO Vikram Pandit has taken pains to remind shareholders and employees that the bank is a completely different company from what it was before the crisis. Citigroup is abandoning a financial supermarket model and moving back to a more traditional form of commercial and retail banking that is focused on high growth markets.

Since early 2008, Citigroup has shed about $500 billion in assets that are considered high-risk and which the bank no longer considers as core to its strategy.

Still the bond markets continue to view Citigroup as a high -risk play, with the cost to protect against default by the bank spiking with every negative headline out of Europe.

On Monday, shares shed 4.5% to close at $24.82, reflecting persisting concerns that the Euro zone leaders will fail to come up with a credible plan to contain the sovereign debt crisis.

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--Written by Shanthi Bharatwaj in New York



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