Citigroup shares gain the most in three weeks on Friday, quarterly earnings top estimates driven by bond trading, consumer banking strength

October 15, 2018 9:05 am

Citigroup Inc’s (C) quarterly earnings, reported on Friday, outstripped Wall Street estimates, as the bank’s operating expenses dropped, while bond trading revenue and global consumer banking revenue rose.

Citigroup shares closed higher for the sixth time in the past sixteen trading sessions in New York on Friday. It has also been the sharpest daily surge since September 19th. The stock went up 2.14% ($1.46) to $69.84, after touching an intraday high at $71.23, or a price level not seen since October 10th ($72.50).

Shares of Citigroup Inc have retreated 6.14% so far in 2018 compared with a 3.50% gain for the underlying index, S&P 500 (SPX).

In 2017, Citigroup’s stock surged 25.21%, thus, it outperformed the S&P 500, which registered a 19.42% return.

The bank’s total revenue shrank to $18.39 billion during the quarter ended on September 30th from $18.42 billion during the same period a year ago.

Citigroup’s global consumer banking revenue was reported to have surged 2%. If taking into account a gain on the sale of Citi’s asset management unit in Mexico, the group’s consumer banking revenue in Latin America went up 20% year-on-year during the third quarter. On the other hand, revenue from Citi’s branded card business in North America shrank 3% year-on-year, mostly because of the sale of the group’s Hilton hotels portfolio.

At the same time, Citi’s revenue from bond trading went up 9% year-on-year during the past quarter.

The bank said its operating expenditures had decreased 1% year-on-year to $10.31 billion during the third quarter, while its efficiency ratio went down to 56.1% from 56.6% in the year-ago quarter.

Meanwhile, Citigroup’s net income increased to $4.62 billion ($1.73 per share) during the quarter ended on September 30th, from $4.13 billion ($1.42 per share) in the year-ago period. In comparison, the median forecast by analysts had pointed to earnings of $1.69 per share.

Citi’s return on tangible common equity was reported at 11.3% during the third quarter.

According to CNN Money, the 28 analysts, offering 12-month forecasts regarding Citigroup Inc’s stock price, have a median target of $84.00, with a high estimate of $101.00 and a low estimate of $62.00. The median estimate represents a 20.27% upside compared to the closing price of $69.84 on October 12th.

The same media also reported that 16 out of 30 surveyed investment analysts had rated Citigroup Inc’s stock as “Buy”, while 9 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

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

Central Pivot Point – $70.27
R1 – $72.16
R2 – $74.48
R3 – $76.37
R4 – $78.26

S1 – $67.95
S2 – $66.06
S3 – $63.74
S4 – $61.42

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