Citigroup’s
stock price and per-share earnings are going to double over the next three years, Wells Fargo argued in a Monday note.
Analysts led by Mike Mayo maintained their Overweight rating on the bank and raised their one-year target for the price to $70 from $60, saying they expect the price to rise to more than $100 from near $50 within three years.
Citi is Wells Fargo’s No. 1 choice among large-capitalization bank stocks for 2024.
Citi stock was up 0.3% to $51.60 in early trading. Over the past 12 months, shares gained 14%, lagging far behind the 24% surge in the
S&P 500.
“We disagree with the many investors who say that Citi is unmanageable, unquantifiable, and/or un-investable,” Wells wrote.
The analysts’ bullishness stems from an overhaul at Citi, which includes dialing back the number of management layers, exiting several non-U.S. consumer markets, and reorganizing the firm into five business lines.
Wells sees earnings per share doubling from $5 to $10 over the next three years, thanks to factors ranging from an increase in efficiency to share buybacks to head count reductions.
“We estimate Citi’s market value prices it for a recession, implies returns equal to only half its 3-year target, and seems almost fully attributed to one business line (“Services” – 1/4 of the firm) with almost no additional value for the rest of the firm,” the analysts wrote, saying that benefits from the bank’s wholesale network and efforts to control expenses are the most underappreciated.
Analysts are mixed on Citi. Some 41% of those who track the stock rate it at Buy, according to FactSet.
Write to Emily Dattilo at [email protected]
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