Analyst Picks and Pans: Citigroup, ConocoPhillips, Lamar

What Wall Street analysts are saying about slected stocks in the news Tuesday

Citigroup (C)

Rochdale Securities rates buy; raises price target

Rochdale Securities analyst Richard Bove on Sept. 29 increased his price target on Citigroup shares to $6.50 from $4. In a research note, Bove said Citigroup has a solid future as "an international bank with strong corporate, high wealth and payment services customers" and that it will be able to fund operations with a highly liquid balance sheet.

Facing a potential collapse, Citi was bailed out by the government multiple times. The Treasury Department provided Citi with $45 billion in bailout money as part of its broader $700 billion bank rescue program. The government also agreed to protect Citi from losses on hundreds of billions of dollars in risky investments.

The government recently exchanged a portion of that $45 billion bailout for a 34% stake in the bank.

Aside from government support, Citi has been restructuring its operations to reduce costs and exit riskier businesses. It has been selling noncore assets, such as its Japanese asset management unit and retail brokerage business.

Bove said the new bank emerging from the changes will be about 40% of its peak size and an attractive investment opportunity. He forecasts Citi will earn 13 cents per share in 2009 and 7 cents per share in 2010. Analysts polled by Thomson Reuters, on average, forecast the bank will lose 16 cents per share in 2009 and earn 10 cents per share in 2010.

ConocoPhillips (COP)

Collins Stewart upgrades to buy from hold; sets price target

Collins Stewart analyst Katherine Lucas Minyard on Sept. 29 upgraded ConocoPhillips, saying the third-largest U.S. oil company should be able to draw more value from its exploration and production investments, improve returns and free up cash flow for growth. She also set a 2010 year-end target price of $60 per share.

"At current share price levels, our model suggests that the shares are pricing in relatively low expectations for future growth and returns," she wrote in a client note.

The analyst said the company could unlock additional value for shareholders by addressing the capital structure and further controlling capital and operating costs.

Lamar Advertising (LAMR)

Barclays upgrades to overweight from equal-weight; raises price target

Barclays analyst George Hawkey said on Sept. 29 that the "lag-effect" on the outdoor advertising recovery provides an opportunity for investors, given his estimates for a faster turnaround than in past recessions. Hawkey said Lamar is a pure-play advertising company without content or foreign exchange risks, with few secular challenges. He noted that Lamar remains undervalued relative to historical levels and its peers.

The analyst said that cost-containment strategies could drive incremental margin growth, putting his 2010 EBITDA estimate above the Wall Street consensus. He believes Lamar could eventually trade at 12.0 times enterprise value/EBITDA on his $472 million 2010 EBITDA estimate, implying a price target of $35, up from his previous target of $22.

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