By Jennifer Yousfi
Managing Editor
Citigroup Inc. (C) stock hit its lowest price level in almost a decade yesterday (Tuesday) after analysts at two different Wall St. firms lowered their respective outlooks for the beleaguered bank.
At Merrill Lynch & Co. Inc. (MER) analysts expect another large write-down for Citi due to subprime related assets. Citing "continued deterioration in U.S. residential and commercial mortgage markets, corporate debt markets, and key investment-banking categories," analysts Guy Moszkowski and M. Patrick Davitt lowered their outlook for Citigroup in a research note.
"In particular we are forecasting another very large write-down of Citi's subprime-related exposures," the analysts wrote, DowJones reported. "This is consistent with our view of the company's excess-capital-raising exercise."
Goldman Sachs Group Inc. (GS) analyst William Tanona also issued a note lowering his previous first quarter profit estimate to just 15 cents per share. He stated the downgrade was due to a "miscalculation in our model," Bloomberg News reported.
Speaking at a private-equity conference in Dubai today, the head of Dubai International Capital LLC expressed doubts that the billions Citigroup has already received from foreign investors would be adequate.
Citigroup has already received cash infusions totaling $30 billion from a variety of sovereign wealth funds including Abu Dhabi, Kuwait, Singapore and Saudi Prince Alwaleed bin Talal.
"It will take a lot more than that to rescue Citi and other financial institutions," said Sameer al-Ansari, the chief executive officer of Dubai International.
But citing an unnamed source, Reuters reported that Citigroup has adequate cash reserves and is not currently seeking additional outside investments.
Last year, Citi was the worst performing stock in the 30 blue-chip securities included in the Dow Jones Industrial Average. In 2008, the shares have dropped almost 25% year to date.
Shares closed at $22.10 after dropping 99 cents, a 4.29% decline, yesterday.
News and Related Story Links:
- CNNMoney.com:
THE RATINGS GAME: Merrill Cuts Citi Profit Outlook On More Expected Charges
- Bloomberg News:
Citigroup May Need Cash as Losses Mount, Dubai Says