The Stock of Citigroup Gains Another Upgrade as Analysts Cheer Its Turnaround Plan

Citigroup Inc. has received an upgrade from hold to buy by CFRA Research, with the bank's turnaround plan under the leadership of Chief Executive Jane Fraser gaining praise. Analyst Kenneth Leon at CFRA noted that Citigroup is currently trading at a discount compared to its peers. The bank's strategic efforts to reduce costs and concentrate on core areas of strength are anticipated to boost profitability and enhance free cash flow.

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Leon emphasized that Citigroup is executing its strategy to streamline operations and drive growth in areas where it holds a market leadership position. Specifically, Citi's corporate treasury services franchise is highlighted as one of its top-performing businesses, generating recurring free revenue and witnessing new account growth.

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As part of its broader restructuring, Citigroup is shifting its focus in global banking for institutions and personal banking outside the U.S. The bank is expected to incur $1.5 billion in restructuring charges in 2023 and an additional $700 million to $1 billion in 2024 as part of these efforts.

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CFRA's Kenneth Leon also raised Citigroup's price target by $11, setting it at $65 per share. Despite the more bullish price target, Leon emphasized that it still represents a 20% discount to Citigroup's net tangible book value, which stands at $81.65 per share.

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Citigroup's peers among large banks are currently trading at or above their net tangible book value. Net tangible book value is a measure that considers a company's tangible assets like cash, intellectual property, and goodwill. Leon's note highlights that Citigroup's valuation, even with the upgraded price target, remains more favorable compared to its industry counterparts.

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This upgrade from CFRA is the latest positive sentiment expressed by Wall Street analysts toward Citigroup. Piper Sandler analysts also upgraded Citigroup on February 15, moving it from overweight to neutral. Analyst R. Scott Siefers at Piper Sandler expressed confidence in CEO Jane Fraser's targeted vision for the company, acknowledging that the turnaround may encounter challenges but overall endorsing the more focused approach.

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The positive assessments from analysts indicate growing confidence in Citigroup's strategic direction under Jane Fraser's leadership. The bank's commitment to cost-cutting, focus on core businesses, and restructuring efforts seem to be resonating well with analysts, leading to favorable outlooks and upgrades.

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