Shares of JPMorgan (
) and Citi (
) are leading the Financial sector higher Friday as investors are
responding to second-quarter results from both
). On Monday, Citi is set to kick-off the heart of the earnings
season with its quarterly figures.
Analysts are looking for Citi to report second-quarter earnings of
89 cents per share on sales of $18.76 billion. The bank posted
earnings of $1.28 per share last quarter and $1.11 per share in the
second quarter of 2011.
According to our
page, Citi has missed analysts' estimates by about 1 percent over
the last year and a half.
Data from our
page shows 12 sell-side analyst firms with a Buy rating on the
stock, four with a Neutral rating, and two suggesting to Sell.
- JPMorgan - While the firm didn't offer much insight into
Citi's upcoming results, it noted increased capital return this
year "had been a key catalyst for the stock in 2012 and the Fed's
recent refusal to approve Citi's capital return plan and Citi's
decision to not ask for return in the resubmission pushes this
out to 2013." JPMorgan also pointed to continually increasing
risks related to litigation and regulation.
On a longer-term basis, JPMorgan likes Citi given: "(1)
attractive valuation with the shares trading below tangible book
value; (2) strong and growing capital levels; (3) revenue growth
opportunities led by its emerging markets franchise
(40% of Citigroup revenues in 2011); (4) sizable amount of loan
loss reserves; and (5) long run potential for return of excess
capital to shareholders."
The firm recently reduced Citi's Q2 EPS estimate from $1.04 to
$1.03. Maintains a Neutral rating into the results.
- Deutsche Bank - Looking for EPS of 78 cents excluding
CVA/DVA. The firm is modeling for a $242 million after-tax loss
on the reduction of the bank's Akbank stake, $250 million in
litigation costs and a $250 million mortgage putback loss. Sees a
$1 billion loan loss reserve release and $100 million in
Deutsche Bank believes capital markets continued to be a key
driver for Citi over the last quarter. Sees expenses declining
about $300 million "given lower
expected litigation costs (of $250m vs. $545m in 1Q), the absence
of a $66m
repositioning charge in 1Q, and likely lower IB-comp accruals in
The firm maintains a Buy rating on Citi shares.
Citi generally reports right at 8am ET. Tune in to our
category to get an analysis of the bank's results just seconds
after the official release.