Citigroup's stock wins another upgrade as analysts cheer turnaround plan

By Steve Gelsi

CFRA's Kenneth Leon boosts Citi to buy from neutral and lifts price target to $65 from $54

Citigroup Inc. has drawn an upgrade to buy from hold at CFRA Research as the bank's turnaround plan under Chief Executive Jane Fraser drew praise.

CFRA analyst Kenneth Leon said Citigroup (C) is currently trading at a discount to its peers and that the bank's effort to cut costs and focus on its core areas of strength should drive increased profitability and better free cash flow.

"We see C executing its strategy to streamline the bank and drive growth in areas where it is a market leader," Leon said in a research note published late Monday.

Citi's franchise in corporate treasury services is one of its higher-ranking businesses that generates recurring free revenue and new account growth, Leon said.

The bank is also refocusing its global banking for institutions and personal banking outside the U.S., as management takes $1.5 billion in restructuring charges in 2023 and another $700 million to $1 billion in 2024.

CFRA's Leon also boosted Citi's price target by $11, to $65 a share, putting it above the Wall Street consensus level of $61 a share.

Even though the price target is more bullish, Leon said it's still a 20% discount to Citigroup's net tangible book value of $81.65 a share.

Meanwhile, Citi's peer group among large banks trade at par or a premium to net tangible book value, which is a measure of a company's tangible assets such as cash, and intangible assets such as intellectual property and goodwill, Leon said.

The upgrade at CFRA is at least the second example of Wall Street analysts warming up to Citi in recent weeks.

Piper Sandler analysts on Feb. 15 upgraded Citi to overweight from neutral.

"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 at the time.

Also read: JPMorgan's global investment banking chief departs for Citi a month after top rank-reshuffle

-Steve Gelsi

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02-27-24 0759ET

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