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Vladimir Zernov
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Citigroup

Citigroup Stock Declines As Company Warns That Trading Revenue Would Fall By 30%

Shares of Citigroup gained additional downside momentum and continued their pullback after the company warned investors that its trading revenue would likely decline by about 30% compared to previous year’s levels.

Currently, analysts expect that Citigroup will report earnings of $9.06 per share in 2021. The company’s earnings are projected to decline to $8.25 per share in 2022, so the stock is trading at less than 9 forward P/E which is cheaper compared to peers like Bank of America or JP Morgan.

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Citigroup’s shares are up by about 15% this year despite the recent pullback as traders bet that higher interest rates would provide support to financial companies.

The stock suffered a sell-off in June as Treasury yields moved lower, but the situation may change quickly after today’s Fed Interest Rate Decision.

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What’s Next For Citigroup Stock?

The near term dynamics of Citigroup stock and shares of other financial companies will depend on Fed’s comments today. If Fed reiterates its dovish message, Treasury yields may move lower, which will be bearish for financial stocks.

In case Fed hints that it is worried about inflation, markets will start to price in the risks of higher interest rates, which will provide support to financial stocks.

It should be noted that Citigroup remains attractively valued compared to many stocks in the current market environment. However, analyst estimates call for lower earnings in 2022, which may serve as an obstacle on the stock’s way up unless there are other positive catalysts.

In this light, the results of today’s Fed’s meeting will likely serve as the main catalyst for the stock until the company provides its second-quarter results on July 14. In fact, dynamics of Treasury yields and Fed’s view of future interest rates will be more important for Citigroup stock compared to the company’s own financial results.

For a look at all of today’s economic events, check out our economic calendar.

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