(Reuters) - Veteran banking analyst Richard Bove widened his fourth-quarter loss estimate for Citigroup Inc , saying the bank may take sizable write-downs in its capital-markets operations, similar to those seen in Goldman Sachs Group Inc's and Morgan Stanley's fourth-quarter results.
The write-downs at Goldman Sachs and Morgan Stanley reflect the fact that the yield on junk bonds keeps rising and the values of commercial real-estate in the secondary markets keep falling, the Ladenburg Thalmann analyst wrote in a note titled "No good news for CITIGROUP (C.NY)"
"The likelihood is that the same factors that caused the losses at Goldman Sachs and Morgan Stanley will impact Citigroup," he said.
Both Goldman Sachs and Morgan Stanley posted losses in the fourth quarter, hurt mainly by write-downs and losses on investments, leveraged loans and mortgages.
The analyst widened his fourth-quarter loss estimate on Citigroup to $1 a share from 61 cents, and 2008 loss estimate to $3.17 a share from $2.79. He left his 2009 loss view of 5 cents a share unchanged.
Citigroup is expected to release its fourth-quarter results on January 22.
The analyst said it appears that some of the regulator/management decisions at present are driven toward shrinking the company through continued divestitures and consolidating the rest to eliminate redundancies.
Bove cut his price target on the stock to $14 from $17, but maintained his "buy" rating.
"I still like this company and this stock despite the battering this recommendation has taken," he said.
Shares of Citigroup closed at $7.83 Wednesday on the New York Stock Exchange.
(Reporting by Tenzin Pema in Bangalore; Editing by Vinu Pilakkott)
