Morgan Stanley Upgrading Citigroup To Overweight (C)

Morgan Stanley is upgrading shares of Citigroup

to Overweight, and it has a $6 price target on shares. In a note to investors, Morgan Stanley writes, "Upgrading Citi to Overweight based on a faster roll-off of non-core assets (and resulting lower NPV of losses), sizable and faster growth in the international business, and significant capital return to shareholders." Morgan Stanley goes on to say, "Our What's in the Price analysis shows C reflecting a 7% ROE; we're at 10% in 2013e. (C trades at 0.75x current BV, 0.63x 2013e BV, and 6.8x 2013e EPS.) We think Citi's long-term strategy to shrink non-core assets and increase its fee-based business mix should lift its P/E multiple by 1 point. Our target multiples are 9.1x 2013e EPS and 0.84x 2013e BV. Our target rises to $6.00 from $5.25, for ~33% upside." Shares of C are up 4 cents in pre-market trading to $4.52, a gain of 0.9%.