Citigroup’s stock underperform as J.P. Morgan’s long-time bullish analyst cuts rating

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Shares of Citigroup Inc. edged 0.2% higher in afternoon trading Thursday, but underperformed their peers and the broader stock market, after J.P. Morgan analyst Vivek Juneja backed away from its bullish stance on the bank for the first time in years in the wake of consent orders from regulators. The SPDR Financial Select Sector ETF rallied 1.3% and the S&P 500 hiked up 0.7%. Juneja cut his rating to neutral, after being at overweight for at least the past three years, while reiterating his $57.50 stock price target. The Office of the Comptroller of the Currency (OCC) assessed a $400 million civil money penalty against Citibank, N.A., and said the bank is required to seek OCC approval before making new acquisitions, and the OCC reserved the right to implement business restrictions and require senior management changes. “Citi has a credibility gap versus peers due to its much weaker profitability, and these orders will add to the pressures as it will need to add resources — inadequate staffing and technology in certain areas were explicitly mentioned in the orders,” J.P. Morgan’s Juneja wrote in a note to clients. “This will be an overhang on Citi and the new CEO, with timing unknown.” Year to date, Citi’s stock has tumbled 43.8% while the financial ETF has lost 18.2% and the S&P 500 has gained 6.6%.
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