exposure to cyclical weakness is less than it used to be, and the company has gotten its corporate governance issues under control, so it's time to stop selling the shares, Prudential said a research note Wednesday.
Prudential raised Citigroup to hold from buy and raised its earnings estimate by 5 cents for 2003 and 10 cents for 2004. It left the price target at $50. Citigroup's shares closed Tuesday at $45.37. Prudential expects the company to raise its dividend by 20% next week.
"We now believe that only half the firm is cyclically or structurally challenged (consumer finance, life insurance, investment banking) instead of two-thirds, assuming that Citi's other market-sensitive activities have gone from negative to positive," Prudential wrote, adding that trading revenue is probably more sustainable in the current environment than previously believed.
Prudential said it's withholding a buy rating because of "ongoing business model challenges, a lingering belief that the legal reserve is insufficient, and seemingly unrealistic expectations for 17% growth in the consumer business."