Updated to include Fitch upgrade.

NEW YORK ( TheStreet) -- Bullish sentiment on Citigroup ( C) stock seemed to return on Wednesday as an equity analyst said the company is worth more than he previously thought, with perhaps 30% upside to current trading levels.

Citi was recently up 0.6% at $4.85 after Atlantic Equities analyst Richard Staite lifted his price target on Citi to $6.30 from $6.

Separately, Fitch Ratings upgraded Citi's individual rating as well as its long- and short-term bond issuer ratings by a notch each, citing "fundamental progress to date" and an "expectation for positive trends in 2011, particularly in loan portfolio quality and non-core asset levels."

Citi shares have been pressured over the past week, following a disappointing fourth-quarter earnings report. Ahead of Citi's earnings miss, its stock price had managed to sustain itself above $5 for a brief time.

Staite lifted his target after reassessing his valuation of Citi's various businesses to find that shareholders may benefit even more from its divestiture of noncore assets.

According to his analysis, Citi's core Citicorp division - which holds assets the firm plans to keep - is worth $5.35 per share. But Staite believes the upside lies in Citi's noncore division, known as Citi Holdings, which he says is worth 95 cents per share. He calls Citi's joint venture with Morgan Stanley-Smith Barney "the most valuable division," which he expects to unlock 50 cents per share in value as it's sold gradually to Morgan Stanley ( MS) over time at fair-market prices.

Additionally, the local consumer lending and special asset pool assets within Citi Holdings are backed by $26 billion worth of capital. Staite thinks those assets could provide $13 billion, or 45 cents per share, of capital to investors as they are wound down.

"We continue to believe the run off of Citi Holdings will lead Citigroup to build up significant surplus capital," Staite said. He estimates Citi will pursue an $8 billion buyback program in 2012 with $15 billion in additional excess capital at the end of that year, beyond new requirements put in place by Basel III.

Fitch upgraded Citi's individual rating "B/C" from "C," and its unsupported long- and short-term issuer default ratings "A-" and "F1," respectively, from "BBB+" and "F2."

In addition to Citi's exposure to high-growth emerging markets and diversified revenue mix, "the upgrades further anticipate that liquidity and capital will continue to be conservatively managed and above evolving regulatory standards," the ratings agency said.

Citi's stock price has remained subdued since Jan. 18, when the firm missed fourth-quarter profit expectations by half. Citi's trading division brought in much weaker revenue than Wall Street had expected, leading Staite to knock 30 cents per share from his valuation estimate of the bank's Securities & Banking division.

The average target price of the 22 analysts who cover Citigroup is $5.59, according to Thomson Reuters, with a range of $4 to $6.90. Thirteen of those analysts suggest clients buy Citi shares, seven recommend holding the stock without adding to positions and two advise clients to sell. Staite reiterated his recommendation that investors pile Citi stock into their portfolios at current prices.

"We see the key catalysts to achieving the target price and 1.2x price to tangible book valuation include continued revenue growth in emerging markets , a further decline in Citi Holdings assets sales, returning to a normal dividend and a share buyback," Staite wrote in his report. "With 30% upside to our target price we maintain our overweight rating."

-- Written by Lauren Tara LaCapra in New York.

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