Shares of Citigroup Inc. (C) fell 2.8% to $22.45 before the opening bell Tuesday after Merrill Lynch cut its 2008 earnings estimates for the banking giant and forecast another very large writedown of Citi's subprime-related exposures.
Citing "continued deterioration in U.S. residential and commercial mortgage markets, corporate dept markets and key investment-banking categories," Merrill reduced first-quarter estimates to a loss of $1.66 a share, from its previous forecast for profit of 55 cents. Full-year 2008 earnings were cut to 24 cents a shares from $2.74 a share.
"We remain concerned about loss provision potential, the direction of long-term strategy, and weak markets for the Capital Markets businesses," Merrill Lynch said in a note to clients.
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