Citi's regulatory issues blunt turnaround thesis, BofA says
** Citigroup's C.N elevated regulatory overhang over the last few months has blunted the turnaround thesis championed by CEO Jane Fraser, BofA Global Research says in a client note
** Citi shares closed ~5% lower on Tuesday after results, reversing course from premarket; Bank beat profit estimates as debt underwriting propped up investment banking results
** Brokerage adds that while the stock opened down, the sell-off accelerated during the call when management "initially failed to give a convincing answer with regards to the risk of Citigroup being subject to a regulator-imposed asset-cap"
** BofA says though Fraser clarified later Citi does not have an asset cap, the "negative narrative" was enough to drive some profit-taking
** Several analysts questioned executives about efforts to address multiple enforcement actions against the bank, known as consent orders, on Monday in a post-earnings call
** Fraser outlined the bank's progress so far and said Citi did not expect any additional regulatory measures
** Bank undergoing an ambitious turnaround plan aimed at cutting costs and improving profitability
** BofA reiterates its 'buy' rating on Citi stock, and raised its price objective to $78 from $77
** It also raised EPS estimates for FY25 to $6.90 from $6.60
** Shares of the bank were last up 2.7% in morning trading, on track for a YTD rise of ~25%, if gains hold
Reporting by Manya Saini in Bengaluru
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