Centerbridge Partners: CIT Could Be Acquisition Target of Large Banks

CIT Group (CIT) might be a reasonable acquisition target for Wells Fargo (WFC), HSBC (HBC), US Bancorp (USB), or TD Bank (TD), based on the total cash positions of those banks, according to Jeff Aronson of private equity and credit investing firm Centerbridge Partners.

Speaking at the Ira Sohn Investment conference, Aronson said his firm, one of CIT’s largest shareholders and one which continues to purchase the co.’s stock as it emerges from bankruptcy, thinks that “CIT is fundamentally a misunderstood security. Based on Aronson’s analysis, who during his presentation was showing a slide that demonstrated how analyst estimates were not in correlation, “the Street is very confused at how to value CIT.”

Aronson thinks CIT can print a price of $65 a share, with $59 in intrinsic value plus benefits from reduced OPEX and synergy.

“CIT is a safe and cheap,” Aronson said.

Aronson’s price target is a long way away from CIT’s present share price, which recently stood at $41.55, up 69 cents, or 1.7%, on the day.

CIT currently trades at a trailing P/E of 18.98, a forward P/E of 28.67 and a very high P/E to Growth ratio of 12.05. The median Wall Street price target on the stock is $47.50 with a high target of $55.00.

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