Wells Fargo is confident in the future performance of Citigroup, projecting that the bank’s stock price and per-share earnings will double within the next three years, according to a note released on Monday.
The team of analysts, led by Mike Mayo, reaffirmed their Overweight rating on Citigroup and raised their one-year target price to $70 from $60. Their long-term outlook suggests that the stock price will exceed $100, a significant increase from its current value of around $50.
Wells Fargo has designated Citigroup as their top pick among large-capitalization bank stocks for 2024.
In early trading, Citigroup stock rose by 0.3% to $51.60. However, over the past 12 months, the stock has only increased by 14% compared to the impressive 24% surge in the S&P 500.
Contrary to the skepticism expressed by some investors, Wells Fargo believes that Citigroup is highly manageable, quantifiable, and investable.
The analysts’ optimism stems from several strategic changes implemented at Citigroup, which include streamlining the management structure, divesting from non-U.S. consumer markets, and restructuring the organization into five distinct business lines.
Wells Fargo anticipates that Citigroup’s earnings per share will double from $5 to $10 within the next three years. They attribute this expected growth to various factors including improved operational efficiency, share buybacks, and workforce reductions.
According to the analysts, Citigroup’s market value currently reflects recessionary expectations and only represents half of its three-year target. They argue that the market underappreciates the benefits derived from the bank’s wholesale network and cost-saving initiatives.
Opinions on Citigroup among analysts are mixed. Approximately 41% of those who track the stock rate it as a Buy, according to FactSet.