By Manya Saini
(Reuters) – Citigroup (NYSE:C)’s stock could double in value over the next three years as the Wall Street lender’s profits surge, Wells Fargo (NYSE:WFC) analysts wrote in a client note on Friday, naming it the brokerage’s top pick in the large-cap banking sector.
CEO Jane Fraser implemented a sweeping overhaul in 2024 to improve the bank’s performance, cut costs, and simplify its sprawling businesses. As part of the turnaround, Citi plans to cut 20,000 jobs by 2026.
“The significance of Citi inflecting from multi-year value destruction to value creation is, in our view, one of the greatest drivers for sustainable stock price outperformance,” Citi bull Mike Mayo said.
Under almost any scenario, excluding a recession, Citi is the brokerage’s “dominant pick”. Wells Fargo raised its price target to $110 from $95, while maintaining its “overweight” rating.
Citi’s shares rose 1.2% to $70.78 in morning trading.
The third-largest U.S. lender now operates under a new organizational structure as part of Fraser’s broader efforts to reduce bureaucracy and boost profits.
Analysts had described 2024 as a transitional year for the bank and said the reshuffle represents an inflection point that will increase its efficiency.
Separately, KBW analysts led by David Konrad also raised their price target on Citi to $85 from $82, calling it one of their “top ideas” for 2025.
The bank may benefit from increased capital markets activity, and its discounted valuation compared to peers could present a compelling opportunity for investors, the brokerage said.
Citi trades at a price-to-book ratio of 0.69, a common benchmark for valuing stocks, according to data from LSEG. This compares with JPMorgan Chase (NYSE:JPM)’s 2.08 and Bank of America’s 1.25.
A ratio below one typically indicates an undervalued stock.
The bank is expected to report fourth-quarter and full-year results in mid-January, with all eyes on executive commentary on growing key businesses such as wealth and investment banking in 2025.
