NEW YORK ( TheStreet) -- One day after Sterne Agee analyst Toddd Hagerman downgradedCitigroup ( C), KBW analyst David Konrad on Tuesday upgraded Citi to an "Outperform" rating from "Market Perform." Konrad raised his price target for Citigroup to $44 from $40, saying that even though the stock appeared "cheap" at 64% of tangible book value and 7.8 times his 2013 earnings estimate, the "primary drivers" of the upgrade included "1) expectations for continued run-off of Citi Holdings following QE3; 2) improving Basel III capital ratio; 3) expectations for capital deployment in 2013; and 4) expectations for continued market share gains in global trade finance." Citigroup's shares closed at $32.75 Monday, returning 25% year-to-date, following a 44% decline during 2011. The company will report its third-quarter results on Oct. 15, with analysts polled by Thomson Reuters estimating a profit of 98 cents a share, compared to EPS of a dollar the previous quarter, and $1.23 a year earlier. Konrad left his third-quarter EPS estimate for Citi unchanged at 89 cents, but raised full-year 2012 estimate by a nickel to $3.79, and his 2013 estimate to $4.25 from $4.10, "largely due to our increased assumptions for the speed of Citi Holdings run-off assets." The analyst's revised assumptions included reduced credit losses and subsidiary losses. Konrad also introduced a 2014 EPS estimate of $4.50 and a 2015 EPS estimate of $5.25. "Although valuation is an important part of our upgrade thesis," he said, "we believe the execution of Citi's strategic plan, recent visibility of earnings, and growth in global payments have been recent drivers in the company's performance. In addition, we believe the economic backdrop may put Citi in a comparative advantage to reduce Citi Holding assets and enable the return on assets of Citicorp to begin to more meaningfully contribute to the consolidated earnings." Citi Holdings is the subsidiary holding the assets that Citigroup has placed in runoff mode, as part of CEO Vikram Pandit's long-term "good bank/bad bank" strategy to right-size the company's balance sheet. With bank stocks surging over the past two months, in the wake of massive liquidity injections by the European Central Bank and the Federal Reserve, Konrad said it was "understandable for investors to want to take gains in stocks given uncertainty this fall with elections, fiscal cliff, and European economy," but Konrad sees greater upside for Citi, as QE3 -- the Federal Reserve's increase of its purchasing of long-term mortgage-backed securities by $40 billion a month to roughly $85 billion a month, in an effort to continue pushing down long-term rates -- "may only enhance the ability to sell assets with Fed providing liquidity and pushing down yields and attempting to increase investors' appetite to move up the risk curve."