Citigroup Rebounds From Yearly Lows, Here Is Why

Key Insights

• Citigroup’s Q1 report beat analyst estimates on both earnings and revenue. 
• Recent earnings reports from JPMorgan and Wells Fargo were disappointing, so traders rushed to buy Citigroup after a better-than-expected report. 
• Analyst estimates keep moving lower, and the continuation of this trend may put more pressure on the stock. 

Citigroup Stock Gains Ground After Quarterly Report

Shares of Citigroup gained upside momentum after the company released its first-quarter report.

Citigroup reported revenue of $19.2 billion and earnings of $2.02 per share, beating analyst estimates on both earnings and revenue. The company noted that revenue declined by 2% year-over-year, while earnings decreased by 44%, “driven by higher cost of credit, higher expenses, and the lower revenues”.

While the year-over-year comparison looks bleak, the market expected weaker results from Citigroup, so the stock managed to move further away from recent lows.

What’s Next For Citigroup Stock?

The recent reports from banks have been disappointing. JPMorgan Chase  found itself under strong pressure yesterday, after the company missed analyst estimates on earnings and highlighted “significant geopolitical and economic challenges”. Wells Fargo  moved lower today after reporting a 5% year-over-year revenue decline.

In this environment, Citigroup’s ability to beat analyst estimates provided material support to the stock. However, it remains to be seen whether the current strength will be sustainable.

Bank stocks are moving lower as the market is worried about the negative impact of higher interest rates on the economy. JPMorgan was the bank that  highlighted this issue, but the whole industry will face problems in case companies and consumers feel the pressure from higher rates.

Analyst estimates have been moving lower in recent months, and this trend may be continued due to external factors. At this point, it looks that the risk of further downside remains.

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