Citigroup Sitting at a Crossroads
By Laurie Kulikowski
NEW YORK. (TheStreet) -- Citigroup(C)'s fleeting foray above $5 this week underlines the importance of its upcoming first-quarter report.
There's no doubt sentiment about the stock is miles better than it was at the start of 2010 as Citigroup has continued to make progress in cleaning up its balance sheet and get back in the game against the other money-center banks, but now that it's battled back, where does it go from here? The improvement began in early March when a number of respected voices, notably Bruce Berkowitz and independent research firm CreditSights, made favorable comments about the company, and the shift has kept up since then as the company did much better than expected with the Primerica(PRI) IPO, and the stock showed itself able to take news that the Treasury would be exiting its 27% stake in 2010 in stride.
Of course, the rally has been far from company-specific as the bank stocks in general have outperformed, buoyed by the rise in the broad market on the perception that the economy is on stable ground, and Wall Street's belief that credit costs reached an inflection point in the first quarter.
But that doesn't mean Citigroup isn't under particular pressure to meet or exceed investor expectations this quarter, especially after JPMorgan Chase(JPM) -- a good comparable in many respects -- came through with blowout numbers on Wednesday. The fact that the stock stalled Thursday after breaching $5 for the first time since mid-October, ending in negative territory on massive volume of more than 1.5 billion shares shows there is still some trepidation out there.
Let's not forget, by its own admission, Citigroup still has a long ways to go. CEO Vikram Pandit said Monday the company's goal remains bringing assets down 40% from their third-quarter 2007 peak. That leaves it with nearly a half trillion more to shed from its balance sheet.
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