When
Citigroup will issue its second quarter results via press release at approximately 8 a.m. (ET) on Friday, July 12, 2024. At 11 a.m. (ET)
What is expected: The bank is forecasted to post Q2 2024 earnings of $1.43 per share (EPS). The consensus estimate for Citigroup’s current full-year earnings is $5.85 per share. Earnings are forecast to come in at $20.1bln.
What happened last time: Citigroup posted its quarterly earnings data on Friday, April 12th. The company reported $1.58 EPS for the quarter, topping analysts’ consensus estimates of $1.29 by $0.29. The firm also reported net income for the first quarter 2024 of $3.4bln, This compares to net income of $4.6bln, or $2.19 per diluted share, on revenues of $21.4bln for the first quarter 2023.
Backstory
There have been a few themes developing in the investment banking industry this year. Most notably the stress test results, payouts to shareholders, and the banker bonus conversations.
Citigroup and several other large lenders recently hiked their dividend payouts. The company raised its quarterly dividend payment to $0.56 per share or 6%. This will be in focus during the earnings release. If there is a move that is seen as to be too aggressive it could backfire.
Citigroup performed better than expected in the stress test this year. The bank was the only one among its major peers, which include Wells Fargo, BofA, Goldman, JPMorgan, and Morgan Stanley, to exhibit lower losses in the stress test compared to last time out.
However, Citigroup was the only one to witness a decline in its capital ratio (CET1 ratio) requirement for the upcoming year, from 12.3% to 12.1%.
On the plus side, the street’s consensus has been very good. Research firm Piper Sandler lifted their target price on Citigroup from $67.00 to $70.00 and gave the stock an “overweight” rating in their most recent report, April 15th. Oppenheimer decreased their target price on Citigroup from $87.00 to $86.00 and set an “outperform” rating on the stock in a research report on April 30th. Goldman Sachs Group reissued a “buy” rating on shares of Citigroup recently too (April 1st). Finally, Evercore ISI lifted their price objective on Citigroup from $60.00 to $62.00 and gave the company an “in-line” rating in a report on Wednesday. But this price has already been met.
This correlation chart based on the top investment banks shows that Citigroup is pretty well placed at the moment. They are by no means the industry leader with Barclays performing the best in a relative perspective based on price action. What could be a surprise to some is that this year Citigroup has pushed 25.4% higher while GS stands at 22% and JPM 23% respectively.
Technical Analysis
We will analyse the daily and weekly timeframes from a technical perspective as they both throw up interesting points. The daily chart is showing a strong uptrend with the share price making consistent higher highs and higher lows. However, $65 per share has been a significant resistance point in the past and it may take a strong catalyst to take the price through the zone. On the downside, just under the psychological $60 per share level of $58.70 has been a strong support and a breach of this could take the price to a 50% fib area close to between $50-52 per share.
On the topside, there are some key levels to watch. If the price can breakout of $65 per share then $80 might be the logical target. The last time the price was there was back in June 2021 and the market could be asking if things are better now than they were back then. Investor sentiment is high. Especially when looking at the S&P 500 and Nasdaq, but have the banks been left behind? Is there good value there? We will need to see.
The weekly chart 61.8% fib level is now confluencing with the resistance zone at $65 per share and it is the key level investors could be looking at on July 12th if the earnings come out positive. If not it could be as you were and the area between $57-65 could become sticky. The market is poised and this will be an interesting watch for sure.
Summary
Citigroup shares have been on a decent uptrend leading into the release and the most recent earnings results have been above consensus. Last time out, Citigroup said it was raising its dividend 5.7% to 56 cents per share and that it would “continue to assess share repurchases” on a quarterly basis. Any more word on a share repurchase program above market expectations could see the price move higher. The key is in the details, will the company continue to buy more shares? Will the banking giant beat estimates and finally push through the $65 per share barrier? We are in for an interesting ride.
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