NEW YORK (
shares peeked back above $5 on Tuesday as the bank held its annual shareholder meeting with the glow cast by its strong first-quarter earnings still fresh in traders' minds.
But holding that level has proved more of a challenge. The stock was recently changing hands at $4.96, up 8 cents, or 1.7% for the session. It got as high $5.06 earlier in the day then slid back. Volume was a robust 732 million shares, as usual tops on the New York Stock Exchange by far, and ahead of the issue's three-month trailing daily average of 570 million. Citigroup shares cracked $5 last week for the first time since mid-October, but were unable to close at or above that level, and then pulled back along with the rest of the financials after the
Securities and Exchange Commission's
civil fraud charges against
came to light.
There appears to be some momentum building for a push above $5 though. The tone at Tuesday's meeting was much improved from last year when shareholders vented their anger at the company, which ultimately accepted $45 billion in bailout funds and had seen its stock dip below $1 the month before. There was some consternation about the prospect of a reverse stock split, which many of the more vocal shareholders seemed to oppose, but the mood was still optimistic. In response, Chairman Dick Parsons told the audience that the reverse stock split "wasn't on the frontburner" but that the company wanted to the flexibility.
The U.S. Treasury voted its shares in favor of the split, and also backed the company's board nominees and its use of stock in lieu of cash compensation to settle $1.7 billion in employee awards. The Treasury holds 7.7 billion Citigroup shares, roughly 27% of the company's outstanding common stock, and is planning to sell that stake over the course of the rest of the year.
The final vote on the reverse stock split proposal isn't in yet but the company's slate of directors was reportedly reelected with a 90% favorable vote.
In the meantime, the strong results for the first quarter continued to get rave reviews from Wall Street and carry the stock higher. UBS, for example, kept its neutral rating on the stock but boosted its 12-month price target to $5 from $3.75, saying the numbers were a "big step in the right direction." The firm lifted its estimate for fiscal 2010 to earnings of 10 cents a share, up from a prior view of 5 cents.
"No doubt Citi put up one of its best quarters in a few years, it was clean enough, and there's clear evidence of progress," UBS analysts wrote. "While it wasn't perfect and we don't think 15 cents is the run-rate number, it was much better than expectations (even better than many thought following JPM and BAC's numbers last week), as Citi is now participating in and benefiting from the economic improvement we're seeing in the U.S. and abroad."
That sentiment shows how far Citigroup seems to have come since the stock started rallying in early March. A change in perception from the "good bank/bad bank" split personality image it's had since the financial crisis brought it low to being seen as able to keep pace with rivals
Bank of America
is significant. Even an attempt of CEO Vikram Pandit to
wasn't been able to deter traders from sending the shares higher.
Rochdale Securities analyst Richard Bove also lauded the quarter and increased his 12-month price target for the stock to $6.90 from $5. Bove, who rates the stock as a buy, hiked his 2010 earnings estimate to 37 cents a share from 4 cents a share, and said he believes Pandit has answered his critics.
"For the first time in recent memory, Citigroup produced a solid profit number," he said, adding later: "The company hit the trifecta. Vikram Pandit's long battle has been justified."
If that's the case, a solid break above $5 shouldn't be far behind.
--Written by Michael Baron in New York