Meredith Whitney Reverses Citigroup Call, Upgrades Stock Pick

Wednesday, 18 Apr 2012 07:38 AM

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Star Wall Street analyst Meredith Whitney is reversing the one call that made her famous in 2007 — she's upgrading her recommendation on Citigroup, a sign the financial crisis and overall economic weakness could finally be a thing of the past.

Whitney notched up her Citigroup recommendation to hold from underperform, CNBC reports

In 2007, Whitney predicted the subprime mortgage mess would force the bank to cut its dividend to raise capital, making a spot-on call that gave her rock-star status among equity analysts after initially receiving heat for making the prediction.

Editor's Note: Google Banned This Video But You Can Watch it Here

In January of 2008, Citigroup cut its dividend and the stock would eventually lose more than 95 percent of its equity value until government support would prop it back up.

“C shares continue to trade well below tangible book value (70 percent), despite relatively lower mortgage and European exposures than its large-cap bank brethren," Whitney, who founded Meredith Whitney Advisory Group in 2009 after leaving Oppenheimer & Co., writes in a note.

Market observers welcomed the call.

"The financial crisis is over," says Rosecliff Capital’s Michael Murphy in response to the Whitney call, CNBC adds.

"There is a lot of money to be made if you can take your emotions out of the equation and focus on company valuations. Big banks will continue to cut spending, manage costs, and make money."

Other analysts are seeing Citi in a new light as well.

"Citi generated solid results in 1Q11, and while management's tone on the conf call was conservative, we believe Citi's results should continue to show momentum," UBS analyst Brennan Hawken says in a report, according to thestreet.com.

Editor's Note: Google Banned This Video But You Can Watch it Here



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