October 31, 2008 9:33 AM EDT

Citi maintains a 'Buy' rating on Hartford Financial Services (NYSE: HIG), drops price target from $38 to $21.

Citi analyst says, "Shares of HIG have fallen 50% following the release of its 3Q08 results. While there was little new information in the results, due to a prior pre-announcement, management's decision to avoid a concrete numerical portrait of capital adequacy has caused investors to sell...Today's sell-off seems to indicate fear of bankruptcy in the equity markets. However, debt markets seem to be less concerned CDS protection for HIG debt one year out trades in a range of 550bps. This is far lower than where CDS for the high profile bankruptcies of 3Q08 traded, and, currently, we note that CDS spreads for competitors' like LNC and PRU trade at a higher range than The Hartford's (around 650 bps)...M&A Must Be Considered — Likely, the reason why The Hartford's CDS trade in a lower range is the belief that it has a reasonable probability of being acquired with the debt being secured by the acquirer. We believe that there are a number of parties who could be interested in The Hartford's business. The obstacle is having the capital to buy HIG."

The Hartford Financial Services Group, Inc. (The Hartford) is a diversified insurance and financial services company.