Citigroup's simplification plan under CEO Jane Fraser wins praise in analyst upgrade

By Steve Gelsi

Piper Sandler analyst R. Scott Siefers says the broker 'likes CEO Jane Fraser's more targeted view of the company.'

Citigroup Inc. has drawn an upgrade to overweight from neutral at Piper Sandler as analysts praised an effort underway by Chief Executive Jane Fraser to simplify the bank.

"Though the turnaround will likely have some bumps along the way, we like [Fraser's] more targeted view of the company," analyst R. Scott Siefers said in a research note on Wednesday.

Siefers raised Citigroup's price target to $63 a share from $56 as a reflection of his "increased confidence."

Citigroup's stock (C) rose 2.4% on Thursday. The stock is now up by 7.5% so far in 2024, compared to a 5.5% increase by the S&P 500 SPX.

The upgrade comes as Citigroup moves to cut roughly 20,000 jobs by 2026 as part of its plan to sharpen the bank's focus.

The bank remains "attractively priced" and after a meeting with Fraser, Siefers came away with increased confidence that the bank will meet its expense-reduction targets.

While Citigroup has embarked on a number of restructurings in the past, Fraser has managed to establish a "better and more targeted vision" for the bank, he said.

"Given the greater transparency on the roadmap, our improving confidence in the company's cost outlook, and the stock's recent pullback and discounted valuation, we view the shares as a good opportunity for value investors," he said.

After a three-month runup, bank stocks fell hard on Tuesday's selloff following a hotter-than-expected inflation report. The sector also weakened earlier this month on jitters surrounding regional banks in the wake of a surprise loss from New York Community Bancorp (NYCB).

"While the group's narrative now has at least some newer questions, we believe C's unique story remains intact," Siefers said.

Also read: Fed's Barr says banking system is strong despite New York Community Bancorp's woes

Also read: 'The small, regional bank business model is unalterably broken,' says Oppenheimer analyst after New York Community Bancorp stock swoon

-Steve Gelsi

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02-15-24 1459ET

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