As Citigroup (C, Financial) enters the fourth year under CEO Jane Fraser, Wall Street analysts express high expectations for the bank's stock. Some analysts have listed it as a top pick for 2025, despite uncertainties surrounding regulatory challenges and potential impacts from upcoming government agendas.
Fraser, who joined Citigroup in 2004 after a stint at McKinsey, faces significant pressure to demonstrate progress. Oppenheimer analyst Chris Kotowski, who rates Citigroup as "outperform," highlights the importance of achieving the bank's mid-term goal set in 2022: a return on tangible common equity (ROTC) of 11% to 12%. Currently, the ROTC stands at 4.9% for 2023, with a recent quarter showing 7%, lagging behind competitors like JPMorgan (JPM) and Bank of America (BAC).
Citigroup's stock trades below its tangible book value, signaling investor skepticism about Fraser's recovery efforts. However, renowned analyst Mike Mayo raised Citigroup's 12-month target price from $95 to $110, citing it as his top bank stock pick for 2025. Despite past criticism of Fraser's predecessor, Mayo now sees Citigroup as a promising choice, partly due to its underperformance relative to rivals, making it more attractive.
Fraser's management overhaul, the most significant in five decades, aims to simplify operations into five business areas and cut 20,000 jobs by 2026. Analysts believe Citigroup's cost-cutting measures will exceed expectations. Despite a modest 8% stock increase since Fraser took over in 2021, analysts remain optimistic about the bank's potential for significant growth.
