CIT valuation likely to expand as simpler structure takes hold: BTIG

|About: CIT Group Inc. (CIT)|By:, SA News Editor

CIT Group's (CIT -0.2%) evolution into a more focused company should help boost its valuation, BTIG analyst Mark Palmer writes in a note.

Another catalyst: CIT is no longer subject to the Fed's stress tests due to the partial rollback of Dodd-Frank Act. As a result, CIT plans a $750M common equity return during H2, as announced on June 28.

The sale of its reverse mortgage business was completed in early June.

However, some disclosures have made it more difficult to decipher the company's progress; management has disclosed three pretax items for Q2--$18M in debt extinguishment costs, $20M-$30M gain related to reverse mortgage business sale, and about $9M of suspended depreciation related to the sale of its European railcar leasing business expected to close in H2.

Palmer rates CIT a buy with a price target of $57; he sees CIT closing the gap between its current valuation and U.S. midcap banks as a group.

Previously: CIT Group to sell European rail business to German firm for $890M (July 3, 2017)

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