Earlier today, Richard Bove, a noted analyst from Rochdale Securities, told CNBC that Citigroup (NYSE: C) was a “buy.”
In his recommendation, Bove said that the government would be able to divest itself of its Citigroup shares without disrupting the market. Bove also believes that Citigroup has strong fundamentals and that buyers should pick-up shares now rather than waiting until the government unloads its shares.
Bove raised his price target on the company to $8.50. Most analyst have their target price on Citigroup between $5.00 and $6.00. At first glance, Bove’s optimistic price target might seem within the real, of possibility, but when looking at the math, the numbers start to fall apart.
If Citigroup hit $8.50 per share, it would have a larger capitalization than Bank of America, Wells Fargo, JP Morgan Chase and every other financial company listed on the New York Stock Exchange. The company would only be behind Microsoft and Exxon Mobil in terms of market capitalization and would be just ahead of Apple, whose market cap. is currently $213.86 billion.
There are simply too many Citigroup shares outstanding for the value to hit $8.50. In fact, there are about 28.5 billion outstanding shares held by the U.S. government and private stock holders. The only way for Citigroup to reach Bove’s estimate would for the company to become more valuable than both Bank of America and Apple Inc.
