Citizens Financial Group or “Citizens” (NYSE: CFG) is the 15th-largest bank in the United States with headquarters in Providence, Rhode Island, with approximately 1,200 branches across the Northeast. Citizens is a wholly owned subsidiary of the Royal Bank of Scotland (RBS, Financial). The bank returned to the NYSE on September 25 of this year with an IPO of $21.50.
Citizens released its Q3 report on Monday, October 27. In addition, the bank will begin ex-dividend trading today, November 4. Highlights of last week’s Q3 report include diluted earnings per share of $0.34 and a net income of $189 million. CEO Bruce Van Saun seemed pleased with the report as he highlighted the “solid bottom line results” and “positive momentum.” Van Saun continued, “The initial public offering was a significant milestone for us as we work towards our aspiration of becoming a top-performing regional bank. We remain focused on delivering enhanced value for our customers, the communities we serve and for our shareholders.”
| CFG, November 3, 2014 | |
| Open | $23.49 |
| 1 Year High | $24.00 |
| 1 Year Low | $21.35 |
| Daily Moving Avg | $23.58 |
| 50 Day Moving Avg | $22.89 |
| Market Cap | 13.38B |
| P/E Ration | 16.37 |
Several firms that initiated coverage of CFG on Monday, November 3rd,including Deutsche Bank (DGZ, Financial) analyst Matt O’Connor who initiated a Buy rating with a price target of $26. O’Connor explained, “Our BUY rating reflects CFG’s low valuation… industry-leading capital… and above average leverage to rising interest rates.” O’Connor remains wary of key challenges, such as “near-term uncertainty surrounding capital deployment (i.e., CCAR), the further sell down of RBS’ stake in CFGÂ and the risk that interest rates remain low for longer than expected.” However, O’Connor believes that these challenges are already incorporated into the valuation of the stock. O’Connor has a 62% success rate recommending stocks with an average return of +4.3% per recommendation.
Separately, Ryan Nashof Goldman Sachs (GSC, Financial) initiated a Neutral rating with a price target of $25 on Monday, November 3. Nash said, “While CFG has a credible plan, hitting targets in the current environment could prove challenging … With shares trading at 11.5x 2016E EPS (10.8x for peers), shares reflect below-average execution risk, which could prove optimistic.” Nash has an 80% success rate recommending stocks with an average return of +10.3% per recommendation.
On average, the top analyst consensus for CFG is Hold.
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