Exchange traded funds indexed to the U.S. financial sector lost ground Monday after Citigroup’s (NYSE: C) 1-for-10 reverse split although some Wall Street analysts are bullish on the stock.

Citi shares slipped nearly 2% at last check. The stock is a top holding in sector ETFs such as Financial Select Sector SPDR Fund (NYSEArca: XLF), which was fractionally lower.

Still, UBS says Citi shares are a buy after the reverse split. [Financial ETFs Prepare for Citigroup Reverse Split.]

Elsewhere, investment researcher Morningstar pegs the stock’s fair value at $64 a share adjusted for the reverse split.

“With a clearer picture of what remains in Citicorp and the earnings power of its trading division, we assume long-run trading revenue will run about 2.5% of trading assets,” said analyst Jaime Peters.

“This multibillion-dollar revenue line is one of the hardest areas for investors to predict, as it is incredibly lumpy. In making this assumption, we also assume the proposed Volcker Rule will not derail Citi’s trading revenue,” the Morningstar analyst wrote in a report. “We believe Citicorp can get back to its historical profit run rate by 2013.”

Financial Select Sector SPDR Fund

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