On Friday, Wells Fargo (NYSE:WFC) analysts adjusted their outlook on Citi shares, raising the price target to $110 from the previous $95, while reaffirming an Overweight rating. The analysts noted that Citi’s expenses are likely to outperform expectations as the bank has already endured the brunt of its financial challenges.
They anticipate that Citi will shift from a period of value destruction to one of value creation, which should be a pivotal moment for the stock. Currently trading at $69.94, InvestingPro analysis suggests Citi is undervalued, with analyst consensus remaining bullish at 1.9 (where 1 is Strong Buy and 5 is Strong Sell).
The analysis highlighted that Citi’s balance sheet is robust, with an expectation for book value growth even in the event of a recession—projecting an increase of half in their base case scenario. This comes at a time when Citi’s stock is trading at a price-to-book ratio of 0.69, confirming its undervalued status.
Additionally, the analysts pointed to a significant management reorganization at Citi, describing it as the most substantial change in 50 years. InvestingPro subscribers can access detailed financial health scores and 8 additional expert insights about Citi’s current position.
The Wells Fargo team also mentioned that bank stocks are emerging as new leaders in the market, anticipating a re-rating due to the end of a 15-year period of increasing regulatory pressure. They emphasized that Citi consistently performs well, particularly with an expected increase in earnings per share (EPS) from $6 to a post-global financial crisis high of $12 (’24E-’27E) in a base case scenario, or even $15 in a bull case scenario.
These projections correspond to return on tangible common equity (ROTCE) greater than 11% and estimated stock prices of $140 and $180, respectively. The stock has shown strong momentum with a 35.24% return over the past year, while maintaining a healthy 3.2% dividend yield.
In a bear case scenario, which assumes a mild recession, the analysts expect EPS to decrease to $5 and a likely significant stock underperformance. However, they pointed out that it is noteworthy that the book value would still increase by an estimated one-fifth. Wells Fargo’s base case for the fiscal years 2026 and 2027 EPS is more than 10% above the consensus. For comprehensive analysis of Citi’s valuation and future prospects, including exclusive ProTips and detailed financial metrics, visit InvestingPro to access the full Pro Research Report.
In other recent news, Citigroup Inc (NYSE:C). is making significant strides in several areas. The financial institution is on track to reach the upper range of its 2024 revenue projections, between $80 billion and $81 billion. Additionally, Citigroup has set a goal of $1 billion in share buybacks for the current quarter, with half of that amount already accomplished. The company’s CFO, Mark Mason, has assured investors that neither buybacks nor dividends were impacted by recent regulatory penalties.
Piper Sandler has reaffirmed its Overweight rating on Citigroup’s shares, citing the company’s effective strategies and promising future prospects. The firm’s analysis highlights Citigroup’s attractive valuation and its commitment to shareholder returns, including a consistent 14-year track record of dividend payments.
In a significant development, Citigroup has secured an exclusive 10-year extension with American Airlines (NASDAQ:AAL) to issue the AAdvantage® co-branded card portfolio starting in 2026. This partnership aims to enhance loyalty and rewards programs for both AAdvantage® members and Citi cardholders.
Under the leadership of CEO Jane Fraser and CFO Mark Mason, Citigroup continues to prioritize profitability and rebuilding investor trust. The bank is investing in data and technology enhancements, while monitoring consumer credit performance in its card business.
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