On Friday, Keefe, Bruyette & Woods adjusted their outlook on Citi (NYSE:C) shares, raising the price target from $85.00 to $92.00, while reaffirming an Outperform rating for the stock. The revision follows Citi's recent financial performance, which surpassed expectations, particularly in Net Interest Income (NII) that included higher-than-anticipated trading NII results.
Citi's stock demonstrated robust performance, outshining the Bank Index (BKX) by 240 basis points. This strong showing was attributed to the company's 2025 guidance, which was more optimistic than analysts had anticipated.
The stock is currently trading near its 52-week high, with InvestingPro data revealing strong returns across multiple timeframes. Despite a slight reduction in the Return on Tangible Common Equity (ROTCE) forecast for 2026, from 11% to a range of 10-11%, this was still ahead of consensus expectations, which fell below the lowered outlook.
The management's decision to revise the ROTCE outlook was due to increased investments in the franchise. Nonetheless, the new guidance provides a clearer trajectory for the company's financial future. The analyst highlighted that this adjustment might not dampen investor sentiment as the projection still exceeds market consensus.
Furthermore, there is an anticipation of an uptick in share buybacks, which could gain further momentum if the Basel III Endgame regulations are substantially relaxed. Such a development could act as a significant catalyst for Citi, especially considering its valuation is currently below tangible book value (TBV).
The analyst's commentary underscores the potential for a more visible glide path for Citi, given these factors. As the financial institution continues to navigate the evolving regulatory landscape and implements its strategic investments, investors are keeping a close watch on Citi's performance and the potential impact on its stock value.
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