11.34 -1.76 (-13.44%) Real-time: 9:54AM EDT
Citigroup on Thursday slashed its price target on American International Group, dropping it to $14 from $36, a drop of 61.1 percent.
"Following a 20 to 1 reverse split of the stock on July 1, the ease and cost of borrowing AIG shares increased dramatically, and we believe investors have come in on the short side in anticipation of future financial woes," the firm wrote to clients.
The firm added that its valuation included a 70 percent chance that the equity at the insurance company is zero.
"While AIG may be able to pay back U.S. investment as well as some debt with core asset sales, eventually the remaining businesses may be those that generate lower returns on equity, handicapped by a high debt burden," it wrote. |