Updated from 3:04 p.m. EDT

It took Oppenheimer only one month after bearish bank analyst Meredith Whitney's departure before it changed its mind on Citigroup's ( C) prospects.

Oppenheimer analyst Chris Kotowski on Tuesday initiated coverage of Citigroup with a perform rating in a research note that says the embattled financial institution is "perhaps not hopeless." He argues that Citi has "a number of powerful franchises that could drive substantial value in future years."

The move is an about-face for Oppenheimer, where Whitney gained acclaim in late 2007 for foreseeing many of Citi's problems, before the decline of the housing market escalated into a massive global economic crisis. Whitney, who worked at Oppenheimer for more than a decade, left the firm last month to start her own stock advisory group.

Whitney had some particularly harsh calls for Citigroup, most of which eventually came true. In 2007, she predicted that Citigroup would need to oust then-CEO Charles Prince, slash its dividend further and sell off assets to raise more capital.

After Whitney announced she would leave on Oppenheimer, the firm dropped its coverage of Citigroup until Kotowski came out with his research report that stated he believed Citigroup could work through its problems.

"Investors need to move beyond the grief of seeing Citi as a penny stock and focus on the fact that this is a strategically important institution with many strong businesses," Kotowski wrote in his note. He goes as far as saying that Citi's credit card operations, though currently stressed by losses like most others, "are indeed a powerful and valuable franchise."

That statement carries considerable weight because in January, Whitney wrote that Citigroup's "core problem is that it simply doesn't make money in any of its businesses outside of Smith Barney."

The differences in the two reports, released only two months apart from each other, don't stop there. Kotowski is anticipating Citigroup will only lose 5 cents a share in 2009, while Whitney forecasted in January that the bank would lose $4 a share.

Kotowski expects Citigroup to break even in the first two quarters of 2009, compared with Whitney's forecast that Citi would lose 97 cents a share in the first quarter and $1.03 a share in the second quarter.

It would seem that Kotowski is buying Citigroup CEO Vikrim Pandit's recent optimism. In an internal memo distributed last week, Pandit said the company is having the "best quarter-to-date" since the third quarter of 2007 and that it has been "profitable" through the first two months of the year.

All that remains to be seen now is who is correct. If Pandit's rosy outlook is any indication, Oppenheimer might have another winning analyst in its stable.

Both Whitney and Oppenheimer did not immediately respond to requests for comment.

For now, Citigroup and other bank stocks are enjoying a nice rally, despite Monday's hiccup. Citigroup finished 7.7% higher and is now up 73% over the last week.

Elsewhere, JPMorgan Chase ( JPM) rallied 8.9% Tuesday and nearly 29% over the last five sessions. Wells Fargo ( WFC) added 7% on Tuesday and has enjoyed a 24% rally over the last week.

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