Analyst Sees Value In CIT Group Restructuring

CIT Group Inc. (NYSE: CIT)'s restructuring will soon result in higher returns for investors, an analyst said Tuesday.

"We're seeing sausage made and it's not pretty," Oppenheimer's Chris Kotowski said. "But at the end of this process there are some good businesses here."

CIT shares are off about 9 percent in the past year, and changed hands recently at $44.61, down $0.06.

Kotowski, who maintained an Outperform rating and $58 target, noted that the company's transportation equipment leasing business is comprising an increasing portion of the company's earnings and revenue.

The segment, which accounts for about two-thirds of the company's business, is comparable to Air Lease Corp (NYSE: AL) or Gatix Corp. (NYSE: GMT), according to Kotowski.

At the end of restructuring, Kotowski said CIT shares will be worth a "great deal more" than the current valuation.

"It will take a year or two, and it's not there now," Kotowski said.

The company, which emerged from bankruptcy in late 2009, has seen its shares lagging the market for at least two years.

CIT has missed earnings expectations by significant margins in three of the past four quarters.

Kotowski said yields on its loan portfolio fell at a steeper rate than the industry average, as new management following its emergence from bankruptcy imposed increasingly conservative lending standards.

Rather than a mature and stable regional bank, Kotowski urged investors to view CIT as "something like a private equity portfolio that is being restructured."