By Manya Saini and Niket Nishant
(Reuters) – Citigroup’s stock value could double over the next three years as profits rise, expenses moderate and the “most significant” reorganization in five decades improves management accountability, officials said. wrote Wells Fargo (NYSE:) analysts on Friday.
The third-largest U.S. lender is the brokerage’s “dominant pick” among large-cap banks in almost every scenario barring a recession. Analysts raised their price target from $95 to $110, while maintaining an “overweight” rating.
Citi shares rose 1.6% to $71.09.
The vote of confidence marks a notable victory for Citi CEO Jane Fraser, who has sought to improve the bank’s profitability since taking the helm in 2021.
Wells Fargo’s Mike Mayo, known for his blunt criticism of the banking industry’s missteps, praised Fraser’s sweeping 2024 overhaul aimed at cutting costs and simplifying the bank’s sprawling business.
“Investors appear to be underestimating…the improvement in management accountability following the 50-year transition from a 5-business global matrix structure,” the Citi bull said.
Analysts have described 2024 as a year of transition for the bank and said the shake-up represents an inflection point that will increase efficiency.
Separately, KBW analysts led by David Konrad also raised their price target on Citi from $82 to $85, calling it one of their “best ideas” for 2025.
Increased activity in the capital markets and Citi’s reduced valuation relative to its peers could present an attractive opportunity, he said.
Citi trades at a price-to-book ratio, a common benchmark for stock valuation, of 0.69, according to LSEG data. That compares to JPMorgan Chase’s (NYSE:) 2.08 and Bank of America’s 1.25.
A ratio below one generally indicates an undervalued stock.
The bank is expected to report results in mid-January, with all eyes on management’s comments on key business growth in 2025.
“Citi’s move from multi-year value destruction to value creation is, in our view, one of the key drivers of a sustainable stock price…
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