Citigroup Stock: Where Will It Trade in 2011?

The government albatross comes off from Citigroup's neck, leading to debate about potential upside in Citi shares. Where wil Citi trade? Take our poll to see what 'TheStreet' thinks.
By Eric Rosenbaum ,

NEW YORK (

TheStreet

) -- The Treasury tether is coming off

Citigroup

(C) - Get Report

shares. The government announced late on Monday that it was selling its remaining stake of 2.4 billion Citigroup shares, at a price of $4.35 per share, and booking a total profit of $12 billion.

The government ended up with a tidy payday from the Citigroup bailout. The fact that the government bailout of Citi was going to be a profit-maker by the time all was said and done isn't a surprise, as the Treasury has been reporting this fact since as early as May.

At the height of the government's Citigroup ownership, Uncle Sam held 7.7 billion Citi shares. Since the Treasury began reducing its estimate for total Troubled Asset Relief Program costs, it has maintained that the value of the 7.7 billion shares of Citigroup common stock held by Treasury would be the biggest payday for the U.S. taxpayer in its bailout of the financial industry.

The government exited its remaining Citigroup shares at a price of $4.35. The government paid the equivalent of $3.25 a share for its massive stake in Citigroup. Yet there are bulls on the Street who see Citigroup shares rising to the $5, and it all raises the question -- as the government leaves Citi with a profit -- whether investors are going to profit from a "next leg up" in Citi shares.

One simple bullish take on the final Treasury sale of its Citi stake came from Deutsche Bank, which argues that it's a positive for Citi in the simple sense that the "lead balloon" has been removed from the bank's shares.

In a related argument, Sandler O'Neill noted that the exit of the government from Citi shares will lead to increased institutional ownership, another positive for the bank stock. Part of the institutional take is that more equity indexes will be buying Citi shares with the government out of the picture, meaning more fund managers holding Citi shares.

Other analysts have noted that the removal of the government overhang on Citigroup shares could free up the bank to pay a dividend or buyback shares, all enticements for the Street and investors to hike the bank's valuation.

Oppenheimer & Co. has Citi rated an outperform and believes shares will return to the $5 mark.

Citi shares had been above the $5 in April, but couldn't hold that level.

Notably, after government announced the 2.4 billion share sale on Monday afternoon, Citi shares reached their highest value since the April annual high level.

Citi shares were up roughly 4% on Tuesday and trading near the $4.60 mark.

For the year, Citi shares have gained 40%. In the past three months, Citi shares are up 20%.

Indeed, now with the government out of the picture, the questions for investors are obvious ones: Are bigger Citi profits to come in 2011 for the savvy bank stock owner? And ...

where will Citigroup shares trade by the end of 2011?

Take our poll below to see what

TheStreet

has to say -- and feel free to leave a comment, illuminating the world as to you take on the future of Citi stock.

-- Written by Eric Rosenbaum from New York.

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