Magazine article American Banker

Citicorp Rates a 'Buy' from Prudential Critic

Magazine article American Banker

Citicorp Rates a 'Buy' from Prudential Critic

Article excerpt

Citicorp shares have won a buy recommendation from a long-time critic, Prudential Securities Inc.'s George M. Salem.

This week's upgrade from a hold represents the first time Mr. Salem has recommended Citicorp's shares since 1985.

He said he sees big potential gains in revenues but is also impressed by the decline in costs for problem assets and the bank's expense controls.

Expects Dividend

Mr. Salem also believes Citicorp will resume its dividend in the first half of 1994.

The payout was omitted in October 1991, near the nadir of Citicorp's fortunes. That year, the bank lost $1.89 per share. Last year it earned $1.35.

Citicorp's stock was up 25 cents to $26 Thursday afternoon. The shares have risen 17% this year and are 150% above their 52-week low.

Mr. Salem thinks the stock could reach $35 within a year. That would be a return to the level of the all-time high of $35,50 reached in 1989.

Earnings Estimate Raised

The Prudential analyst raised his 1993 earnings estimate for Citicorp to $2.50 per share from $1.80. His 1994 estimate is $4.50.

That puts Mr. Salem well beyond Wall Street's consensus estimates of $2.11 for 1993 and $3.43 for 1994 as tallied by First Call Corp., an affiliate of American Banker.

"What the Street doesn't seem to fully appreciate is the revenue power Citicorp has in its huge international franchise," Mr. Salem said.

Cost Control

The revenue and earnings capacities have been muffled by the bank's credit woes of the past few years, he said. …

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