NEW YORK (TheStreet) -- Shares of Citigroup (C) - Get Report are up 0.88% to $53.96 in early morning trading Tuesday after JPMorgan upgraded its rating to "overweight" from "neutral," and increased its price target to $58 from $54.
"The Costco co-branding deal win adds a third leg to the Citi story," analysts said, adding that the agreement begins in April 2016 with Citi replacing the current deal Costco has with American Express (AXP) - Get Report.
JPMorgan analysts forecast that earnings will increase to $1.40 per share in its first quarter of 2015, and fiscal year earnings will be $5.20 per share in 2015 and $5.60 per share in 2016.
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Analysts expect the financial services holding company to report fiscal year revenue of $76.92 billion in 2015 and $79.57 billion in 2016.
JPMorgan said that they have had concerns about Citi in regards to tepid fundamentals and loss of market share in key businesses, such as U.S. credit cards. However, the firm believes that the Costco co-branding acquisition should reverse this.
"We expect faster growth in the credit card business should improve overall Citicorp return on assets," analysts noted.
Seperately, TheStreet Ratings team rates CITIGROUP INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CITIGROUP INC (C) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 1537.12% to $27,291.00 million when compared to the same quarter last year. In addition, CITIGROUP INC has also vastly surpassed the industry average cash flow growth rate of 303.10%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, CITIGROUP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for CITIGROUP INC is rather low; currently it is at 22.63%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.66% significantly trails the industry average.
- You can view the full analysis from the report here: C Ratings Report