Wall Street Analysts Think Citigroup (C) Is a Good Investment: Is It?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Citigroup's average brokerage recommendation (ABR) and the potential misalignment of interests between brokerage analysts and retail investors [1][4][9]. Group 1: Citigroup's Brokerage Recommendations - Citigroup has an average brokerage recommendation (ABR) of 1.80, indicating a consensus between Strong Buy and Buy, based on recommendations from 20 brokerage firms [2]. - Out of the 20 recommendations, 11 are classified as Strong Buy (55%) and 2 as Buy (10%) [2]. Group 2: Limitations of Brokerage Recommendations - Brokerage recommendations may not be a reliable basis for investment decisions, as studies show limited success in guiding investors towards stocks with the best price increase potential [4]. - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell recommendations [5][9]. Group 3: Zacks Rank as an Alternative - The Zacks Rank, which classifies stocks into five groups based on earnings estimate revisions, is presented as a more reliable indicator of near-term price performance compared to ABR [7][10]. - The Zacks Rank is timely and reflects current earnings estimates, while ABR may not be up-to-date [11]. Group 4: Citigroup's Earnings Estimates - The Zacks Consensus Estimate for Citigroup's current year earnings has increased by 0.6% over the past month to $5.88, indicating growing optimism among analysts [12]. - The recent change in consensus estimates, along with other factors, has resulted in a Zacks Rank 2 (Buy) for Citigroup, suggesting a positive outlook for the stock [13].