Keefe, Bruyette & Woods Previews Citigroup's 4Q Print, Expects Some 'Kitchen Sinking'

Brian Kleinhanzl of Keefe, Bruyette & Woods previewed Citigroup Inc's (NYSE: C) fourth quarter earnings that are scheduled for January 15 before the market open.

“Our earnings expectations for Citigroup are slightly below the consensus estimate,” Kleinhanzl wrote. “We are expected some ‘kitchen sinking' this quarter, but believe a strong revenue beat could move shares of Citigroup higher.”

Shares are Market Perform rated with a $54 price target.

Kleinhanzl expects the company to earn $1.07 per share, despite a $2.7 billion legal provision and $800 million of repositioning expense in the quarter.

The analyst is focusing on cards growth, reserve release, FICC revenues and a OneMain sale as possible catalysts that could drive shares higher. Expectations for the quarter are “low,” implying shares have more possible upside than downside following earnings.

Bottom line, Kleinhanzl maintains a neutral view on shares as emerging market risks have increased and there remains “meaningful” downside risk if the company doesn't pass CCAR.