(Adds S&P downgrade of E*Trade, closing stock prices throughout)
Financial stocks were mixed Friday, with
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,
ended 2.7% higher,
gained 2.4%, and
Bank of America
rose 2.5%, and
was higher by 2.1%.
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,
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.
finished 1.1% lower at $17.36.
Among other analyst actions,
Fidelity National Financial
was upgraded at RBC Capital Markets to outperform from sector perform, although the price target reduced to $16 from $21. RBC also cut its 2009 estimate for Fidelity to $1.20 a share from $1.35 in light of higher interest rates reducing top-line growth. Shares closed up 7.7% to $13.48.
Meanwhile, Barclays increased estimates through 2010 for
, maintaining its equal-weight rating and $10 stock price target. The firm said that delinquency rates appear to be improving. Discover shares tacked on 0.5% to end the day at $9.32.
Elsewhere, Keefe, Bruyette and Woods analysts cut second-quarter estimates for
Fifth Third Bancorp
in order to reflect estimates for the FDIC deposit insurance costs. KBW now expects the bank to post a loss of 31 cents a share, compared to the previous estimate of a loss of 24 cents a share.
KBW did raise its stock price target for the bank to $10 from $9. Fifth Third shares rose 1.8% to $7.37.