Written by Manya Saini
(Reuters) – Citigroup shares could double in value over the next three years as the Wall Street lender’s profits rise, Wells Fargo analysts wrote in a note to clients on Friday, calling it a top brokerage pick in the big-bank sector.
Chief Executive Jane Fraser has implemented a major overhaul in 2024 to improve the bank’s performance, cut costs and streamline its sprawling business. As part of this transformation, Citi plans to cut 20,000 jobs by 2026.
“The importance of Citi’s shift from multi-year value destruction to value creation is, in our view, one of the greatest drivers of sustainable stock price outperformance,” said Mike Mayo, chief bull at Citi.
Under almost any scenario, short of a recession, Citi is the “dominant choice” of brokerages. Wells Fargo raised its price target to $110 from $95, while maintaining an “overweight” rating.
Citi shares rose 1.2% to $70.78 in morning trading.
The third-largest US bank is now operating under a new regulatory 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 that the amendment represents an inflection point that will increase its efficiency.
Separately, KBW analysts led by David Conrad also raised their price target on Citi to $85 from $82, calling it one of their “best ideas” for 2025.
The brokerage firm said the bank may benefit from increased capital markets activity, and its discounted valuation compared to its peers may provide a compelling opportunity for investors.
Citi trades at a price-to-book ratio of 0.69, a common benchmark for valuing stocks, according to data from LSEG. This compares to JPMorgan Chase’s 2.08 and Bank of America’s 1.25.
A ratio less than one usually indicates an undervalued stock.
The bank is expected to report fourth-quarter and full-year results in mid-January, with a focus on executive comments on key growth businesses such as wealth and investment banking in 2025.
(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Sriraj Kalluvilla)
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