Stick With Citigroup Stock, Says B of A Merrill

NEW YORK (TheStreet) -- The expected cutting of earnings estimates for the nation's largest banks continues, but Bank of America Merrill Lynch analyst Erica Najarian still thinks Citigroup's (C) stock is a bargain.

In light of JPMorgan Chase's (JPM) announcement at its investor conference last month that first-quarter trading activity was running at a 15% slower pace than last year, followed by similar guidance from Citigroup, analysts have expected a soft first quarter for the nation's largest banks. Jefferies analyst Ken Usdin cut his first-quarter earnings estimate for Citi significantly, and predicted other analysts would follow suit, while writing in a client note that he favors JPMorgan and Bank of America (BAC) for the next year, over Citigroup.

Najarian on Wednesday cut her 2014 earnings estimate for Citigroup to $4.95 a share from $5.60, while also cutting here 2015 EPS estimate to $5.80 from $5.90, and cutting here 2016 EPS estimate to $$6.20 from $6.35.

Citigroup's shares closed at $48.14 Tuesday, down 8% this year, following a return of 32% in 2013. The shares trade for 0.9 times tangible book value, according to Thomson Reuters Bank Insight, and for 8.4 times the consensus 2015 EPS estimate of $5.72. By both of those measures, Citigroup is the cheapest among large-cap U.S. bank stocks.

Citi will announce its first-quarter earnings on April 14, with a consensus EPS estimate of $1.23. Najarian's first-quarter EPS estimate is $1.05.

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