ETF Trends
ETF Trends

Beleaguered financials sector exchange traded funds (ETFs) are readying themselves for a reverse split in Citigroup (NYSE: C) shares.

UBS Securities has issued a buy recommendation on the reversal in Citigroup’s performance, issuing a $5.60 price target objective, reports Jon C. Ogg for 24/7 Wall St.

The research recommendation is noteworthy considering that most traders usually short sell, or bet against, reverse-split stocks.

Citigroup will split its shares by a factor of 1 to 10, which translates to a price tag of around $45. But the more optimistic UBS projects a $56 target objective post-split.

Citigroup Chief Executive Officer Vikram Pandit believes the reverse split, along with a renewed dividend, will “open doors for more potential investors to buy in” since “some institutional investors will not buy stocks that trade at less than $10 or $5 per share or that do not pay a dividend,” reports Donal Griffin for Bloomberg.

For more information on the financials sector, visit our financials category.

  • iShares Dow Jones U.S. Financial Services Index Fund (NYSEArca: IYG). Citi is 9.1%.
  • SPDR KBW Bank ETF (NYSEArca: KBE). Citi is 7.0%.
  • Financial Select Sector SPDR Fund (NYSEArca: XLF). Citi is 6.8%.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.