Citigroup (NYSE:C) stock falls 2.5% in premarket trading after Jefferies analyst Ken Usdin downgrades the stock to Hold from Buy after the bank unveiled new targets at its investor day on March 2.
"The new ROTCE [return on tangible common equity] targets are loftier (11%-12%) and farther away ('24-'26) than our expectations," the analyst wrote in a note to clients.
With core ROTCE at 8.9% in 2021, Usdin expects Citi (C) slipping to 8.3% in 2022 and to 7.9% in 2023, "making a leap to 11% seem very unlikely in '24."
One of his chief concerns is the bank's exposure from non-U.S. sources, now at ~50%. "While this is also among its biggest strengths (due to its vast involvement in global commerce), it is a potential near-term liability (should global end-demand and transaction activity slow due to the Russia-Ukraine war)," Usdin said.
The Ukraine-Russia war will also hinder the bank's plan to sell its consumer banking businesses in Russia and Poland.
Citi's (C) capital is strong, but it needs to be preserved due to potential losses from Russia and a rising, he added.
KBW also downgraded the stock last week after the investor day event.
Previously (March 2) Citigroup sees NII, noninterest revenue growth in 2022, expenses up 5-6%