Citigroup shares fall the most in a week on Thursday, the stock may double in upcoming years, Mike Mayo says

August 11, 2017 6:45 am

According to a note by Wells Fargo Securities analyst Mike Mayo, who joined the firm recently, Citigroup Inc’s (C) shares may double in price during the upcoming 4 to 5 years. He also expects Citigroup to achieve the best performance in terms of cost of capital and return on equity among its competitors.

Citigroup shares closed lower for a third consecutive trading session on Thursday. It has also been the steepest daily loss since August 3rd. The stock went down 1.77% ($1.21) to $67.22, after touching an intraday low at $67.17, or a price level not seen since July 28th ($67.00). In the week ended on August 6th the shares of the financial group added 2.30% to their market value compared to a week ago, which marked a second consecutive period of gains and also the best performance since the week ended on July 2nd. The stock has extended its loss to 1.80% so far during the current month, following a 2.35% surge in July. The latter has been a third consecutive month of gains. For the entire past year, the shares of the NYSE-listed financial holding company gained 14.84%.

According to Mayo’s note to clients dated August 9th, Citigroup may see an increase of its return on equity to 9% in 2019 and 11% in 2021, with the major factor being stock buybacks. Through such deals Citigroup’s shares could be reduced by 1/3 in five years, the banking analyst noted, while also adding the Wall Street bank to Wells Fargo’s “priority stock list”.

In comparison, Citi achieved a 7% ROE last year.

Meanwhile, at the bank’s investor day in July, Citigroup executives said that the financial holding could be able to generate a 10% return on common tangible equity by 2019, 11% in 2020 and 14% in a longer term.

According to CNN Money, the 28 analysts, offering 12-month forecasts regarding Citigroup Inc’s stock price, have a median target of $73.00, with a high estimate of $81.00 and a low estimate of $50.00. The median estimate is an 8.60% surge compared to the closing price of $67.22 on August 10th.

The same media also reported that 14 out of 30 surveyed investment analysts had rated Citigroup Inc’s stock as “Buy”, while 11 – as “Hold”. On the other hand, 2 analysts had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the Citigroup stock are presented as follows:

R1 – $67.31
R2 – $67.39
R3 (Range Resistance – Sell) – $67.48
R4 (Long Breakout) – $67.74
R5 (Breakout Target 1) – $68.05
R6 (Breakout Target 2) – $68.17

S1 – $67.13
S2 – $67.05
S3 (Range Support – Buy) – $66.96
S4 (Short Breakout) – $66.70
S5 (Breakout Target 1) – $66.39
S6 (Breakout Target 2) – $66.27

By using the traditional method of calculation, the weekly levels of importance for Citigroup Inc (C) are presented as follows:

Central Pivot Point – $68.72
R1 – $69.91
R2 – $70.85
R3 – $72.04
R4 – $73.24

S1 – $67.78
S2 – $66.59
S3 – $65.65
S4 – $64.72

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