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On Thursday, RBC Capital Markets adjusted its price target for Citizens Financial Group (NYSE:CFG) shares, bringing it down to $44 from the previous $50, while still maintaining an Outperform rating on the stock. Currently trading at $35.86 with a market capitalization of $15.65 billion, the stock appears undervalued with a price-to-book ratio of 0.68. The revision follows the company’s first-quarter earnings report for 2025, which showed substantial progress in its strategic goals, particularly in the expansion of Citizens Private Bank. According to InvestingPro, five analysts have recently revised their earnings expectations downward for the upcoming period.
Citizens Financial Group reported a return on common tangible equity (ROTCE) of 9.6% and a return on equity (ROE) of 6.2% for the quarter. These figures reflect the bank’s efforts to reach its medium-term ROTCE goal of 16-18%. The bank’s profitability is expected to be driven by an increase in fee revenues and effective capital management strategies. Notably, the bank has maintained dividend payments for 12 consecutive years, currently offering an attractive dividend yield of 4.74%.
The report from RBC Capital also highlighted that Citizens Financial’s Common Equity Tier 1 (CET1) ratio stood at 10.6%. However, when accounting for negative Accumulated Other Comprehensive Income (AOCI), the CET1 ratio dropped to 9.1%, which is still above the regulatory requirement of 9.0%. This indicates that the bank maintains a buffer above the minimum capital requirements, showcasing its financial resilience.
The analyst from RBC Capital expressed confidence in Citizens Financial’s ability to enhance its profitability through its ongoing strategic initiatives. The emphasis on growing fee-based revenues and managing capital effectively is expected to contribute to the bank’s financial targets in the medium term.
Despite the lowered price target, the Outperform rating suggests that RBC Capital Markets sees potential in Citizens Financial Group’s stock, backed by the bank’s solid quarterly performance and its strategic growth initiatives. The bank’s ability to maintain a healthy capital ratio amidst its expansion efforts has been noted as a positive aspect of its current financial standing. InvestingPro analysis shows a "FAIR" overall financial health score, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of this and 1,400+ other US stocks.
In other recent news, Citizens Financial Group reported first-quarter 2025 earnings that exceeded analyst expectations with an earnings per share (EPS) of $0.77, surpassing the anticipated $0.75. Revenue met forecasts at $1.94 billion, demonstrating the company’s stable financial performance. The firm executed $200 million in stock buybacks, returning a total of $386 million to shareholders, which reflects strategic capital management. DA Davidson adjusted its price target for Citizens Financial Group from $53.00 to $49.00 but maintained a Buy rating, citing potential benefits such as improved net interest margin and growth in the New York metropolitan area.
JPMorgan reiterated its Neutral rating for Citizens Financial Group with a steady price target of $43.00, noting the company’s effective expense management and reshaping of its balance sheet. Despite economic challenges, Citizens Financial Group has not built a significant cushion in its capital ratios, which JPMorgan suggests could enhance management credibility if addressed. The bank’s strategic initiatives, including the sale of non-core student loans and new credit card product launches, underscore its commitment to growth and innovation. Citizens Financial Group reaffirmed its full-year EPS estimate and projected a net interest margin increase to between 3.05% and 3.10% by year-end.
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