This share could be a good long-term investment, but perhaps now is not the best time to invest in Citigroup.
If the price falls below $40, it would be a strong “sell” signal, and we have the open road to $35.
Total revenue for the 3rd quarter was down 6.8% year-on-year, while GAAP EPS was $1.40
Citigroup (NYSE: C) shares have dropped from $46 to $41 in less than three weeks and the current price is around $41. When trading these shares, investors should keep in mind that Citigroup is a stable bank with a good position in the market.
Fundamental analysis: Citigroup is a stable bank, but the price could weaken further in the coming weeks.
Citigroup is an American multinational investment bank and financial services company with headquarters in New York City. It is the third largest banking institution in the United States with over 200 million customer accounts.
Citigroup ended the third quarter as the financial stocks with the worst performance in the last three months, with a decline of more than 15%. The main reason for this is the Covid 19 pandemic, but once the situation stabilizes, the price of this stock will be at a much higher level.
This share could be a good long-term investment, but perhaps now is not the best time to buy Citigroup shares, as the price could fall even further in the coming weeks. COVID 19 cases in the U.S. continue to rise, while Europe is not doing any better with this pandemic.
Citigroup has released Q3 earnings results, with total revenues down 6.8% year-over-year, while Q3 EPS under GAAP was $1.40. According to the latest news, Citigroup’s new Chief Executive Officer has started to cut jobs. He started with executive directors, but this could shift to lower ranked employees.
Nevertheless, Citigroup is a stable bank with a good position in the market, and this bank will survive the COVID-related storms. Citigroup increased its revenues to USD 76.5 billion in 2019, and with a market capitalization of USD 85 billion, this stock is not overvalued.
Fund managers valued Citibank at $113B, and at its current price of $41 per share, it offers more than 25% upside potential. Investor attention is also focused on the negotiations on the US economic stimulus package and the upcoming presidential elections.
Democrats and Republicans are using a coronavirus stimulus package as an electoral tool, both parties have reported “progress” but have broadened the discussions further. The U.S. presidential election will be held on November 3, and according to the polls, U.S. President Trump’s rival, Joe Biden, is leading.
“Citigroup will certainly be prepared for the possibility of a contested presidential election, which could disrupt the stock market,” said the bank’s CEO, Michael Corbat.
Technical analysis: $40 represents a very strong support
Data source: tradingview.com
On this diagram I have marked important resistance and support levels. The important support levels are $40 and $35, $45, $50 and $60 represent the resistance levels.
If the price jumps above $50 it would be a signal to buy that stock and we have an open path to $55. A rise above $60 supports the continuation of the upward trend for Citigroup stock and the next price target could be around $70.
However, if the price falls below $40, this would be a strong “sell” signal and we have an open path to $35.
Summary
Citigroup believes that continued pressure and consumers will reflect the impact of rates and lower levels of activity associated with COVID-19. Citigroup’s shares are currently attractively valued and analysts believe the bank is able to weather the storms associated with COVID. I believe that this stock could be a good long-term investment, but perhaps now is not the best time to invest in Citigroup shares, as the price may fall further in the coming weeks.
