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Citigroup Stock: Potential Upside

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Attractive valuation

Most of the analysts covering Citigroup (C) stock recommend a “buy.” Citigroup is expected to benefit from the increased net interest income due to continued growth in loans and deposits. Citigroup’s net interest income is projected to grow as much as or more than $2 billion in 2019. Lower expenses, better asset quality, and share repurchases are expected to drive Citigroup’s bottom-line growth.

Citigroup has a strong history of beating analysts’ EPS estimates. The bank has boosted shareholders’ return through dividends and share repurchases. Citigroup shares are trading at a forward PE ratio of 8.3x, which looks attractive considering the projected EPS growth of ~13% in 2019 and the current dividend yield of 2.9%.

 

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Rating and target price

Among the analysts providing recommendations on Citigroup stock, 23 recommended a “buy,” five recommended a “hold,” and one recommended a “sell.” rating. Analysts have a consensus target price of $76.81 per share on Citigroup stock, which implies an upside potential of 23.1% based on its closing price of 62.42 on February 14.

Analysts are also bullish on shares of other major US banks. Growth in the loan portfolio, increased deposits, the improving efficiency ratio, and share repurchases are expected to drive banks’ top and bottom lines. Most of the analysts have a “buy” rating on Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) stock.

Correction: An earlier version of this article included a graph for Target Corporation. We regret this error. 

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