By Manya Saini and Niket Nishant
(Reuters) – Citigroup shares could double in value over the next three years as profits rise, costs are cut and the “most significant” reorganization in five decades improves management accountability, Wells Fargo (NYSE:) wrote analysts in a note on Friday.
The third-largest U.S. lender is the brokerage’s “dominant choice” among large-cap banks in nearly every scenario, short of a recession. Analysts raised their price target to $110 from $95, while maintaining an “overweight” rating.
Citi shares rose as much as 1.6% to $71.09.
The confidence vote marks a significant victory for Citi chief executive 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 outspoken criticism of the banking industry’s missteps, praised Fraser’s sweeping overhaul in 2024 to cut costs and streamline the bank’s sprawling operations.
“Investors appear to be underestimating … improved management accountability after transitioning from 50 years of global matrix structure to 5 lines of business,” Citi said in a newsletter.
Analysts described 2024 as a transition year for the bank and said the restructuring represents a turning point that will increase efficiency.
Separately, KBW analysts led by David Konrad also raised their price target on Citi to $85 from $82, calling it one of their “best ideas” for 2025.
Increased capital market activity and Citi’s lowered valuation compared to peers could present a compelling opportunity, it said.
Citi trades at a price-to-book ratio, a common measure of stock valuation, of 0.69, according to LSEG data. That compares to 2.08 for JPMorgan Chase (NYSE: ) and 1.25 for Bank of America.
A ratio below one usually indicates an undervalued stock.
The bank is expected to report results in mid-January, with all eyes on comments from executives about growing key businesses in 2025.
“The importance of Citi’s shift from multi-year value destruction to value creation is, in our view, one of the biggest drivers of sustained share price outperformance,” Mayo said.
