CIBC WORLD CUTS CITIGROUP TO SECTOR UNDERPERFORM FROM SECTOR PERFORM
CIBC World analyst Meredith Whitney tells salesforce believes that over the near term, Citigroup (C) will need to raise $30 billion-plus in capital through either asset sales, a dividend cut, capital raise, or a combination. She believes this will pressure stock significantly lower.
Whitney notes that tangible capital stands at just 2.8%; since 2006 Citigroup has made $26 billion in acquisitions, taken over $6 billion in recent charges, and increased its dividend against the backdrop of almost no net income growth. She notes average tangible capital ratios are close to 5% for Citi's peers. She says higher credit losses, further disruption in SIV market could only exacerbate her thesis of capital pressures.
She cuts $4.55 2008 EPS estimate to $4.20, and $4.95 for 2009 to $4.55.
CIBC WORLD DOWNGRADES BANK OF AMERICA TO SECTOR PERFORM FROM SECTOR OUTPERFORM
CIBC World analyst Meredith Whitney tells salesforce given her expectations of protracted pressure on financials at large, diminished revenue outlook for Bank of America (BAC) specifically, she downgrades the stock. She cuts $5.25 2008 EPS estimate to $4.85, and $5.60 for 2009 to $5.10, mostly driven by much more conservative estimate for equity investment gains coupled with slightly lower mortgage, credit card, deposit fee income.
She notes her prior $65 target was based upon what would now be 13 times her 2008 estimate, which she no longer believes is realistic as she anticipates there will be protracted pressure on bank stocks; she now thinks a 10-11 multiple will be the high end of where group trades near term; has no target.
JEFFERIES UPS ESTIMATES, TARGET, KEEPS BUY ON MANTECH INTERNATIONAL
Analyst Joseph Valfi tells salesforce Mantech International (MANT) delivered another solid quarter, beating his estimates and Street expectations. He says accelerating organic growth (of almost 18% year-over-year) in a somewhat tight funding environment reinforces his view that Mantech has the most resilient business model among federal IT players.
Valfi also believes sequential margin improvement of almost 80 basis points (excluding one-time charges) is impressive. He thinks solid bookings momentum should drive attractive double digit revenue and some margin expansion next year.
He raises $1.80 2007 EPS estimate to $1.87, $2.05 for 2008 to $2.17. He also raises $40 price target to $48.