Deutsche Bank (NYSE:DB) Reiterates “Buy” Rating on Citigroup (NYSE:C)

Deutsche Bank analyst Matt O’Connor reiterated a “Buy” rating on Citigroup (NYSE:C), along with his price target of $505, after meeting with Citigroup CFO John Gerspach on Monday.

Much of O’Connor’s rating is based on what he considers a reduction in risk in Citigroup’s trading book of business, and even with the extreme amount of volatility in trading that is going on now, doesn’t think it will adversely affect the giant bank.

O’Connor also seems to be shrugging off the exposure Citigroup has to the sovereign debt crisis in Europe, as he seemingly doesn’t think that it will have a dramatic impact on the performance of Citi.

Gerspach told O’Connor in their meeting that return on assets, or return on investment over the long term should come in at from $1.25 percent to 1.5 percent. That’s an extremely optimistic outlook, but if the ROI is even at 1 percent, it would make Citigroup a very attractive target in O’Connor’s thinking. And he would be right. That’s a high ROI for a company, and 1.5 percent would be extraordinary, although highly unlikely.

The price target of O’Connor for Citigroup is more in line with reality, as it stands at 10 times his “normalized” estimate of 53 cents earnings a share.

Fellow analysts are actually higher than that on normalized earnings, which are as high as 75 cents a share.