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Citigroup

New York City-based investment bank Citigroup reported better-than-expected earnings for the first quarter, largely driven by improvements in the macroeconomic outlook and lower loan volumes.

Citigroup reported net income for the first quarter 2021 of $7.9 billion, or $3.62 per diluted share, on revenues of $19.3 billion. This compared to net income of $2.5 billion, or $1.06 per diluted share, on revenues of $20.7 billion for the first quarter 2020. That was higher than Wall Street’s consensus estimates of $2.56 per share.

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However, the bank’s revenue decreased 7% from the prior-year period. Citigroup’s end-of-period loans were $666 billion as of quarter-end, down 8% from the prior-year period on a reported basis and 10% excluding the impact of foreign exchange translation.

Citigroup shares, which slumped more than 20% in 2020, rebounded over 17% so far this year.

Citigroup Stock Price Forecast

Fourteen analysts who offered stock ratings for Citigroup in the last three months forecast the average price in 12 months of $83.31 with a high forecast of $117.00 and a low forecast of $66.00.

The average price target represents a 14.31% increase from the last price of $72.88. Of those 14 analysts, nine rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $89 with a high of $130 under a bull scenario and $50 under the worst-case scenario. The firm gave an “Overweight” rating on the investment bank’s stock.

Several other analysts have also updated their stock outlook. Barclays raised the price target to $84 from $77. Piper Sandler lifted the target price to $93 from $89. Oppenheimer increased the price target to $117 from $112. UBS upped the price target to $92 from $89. Credit Suisse raised the price target to $83 from $78.

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Analyst Comments

Citi is trading at just 0.8x NTM BVPS implying through the cycle ROE of just 8%, well below our 9% estimate for 2023. We believe the stock is cheap even if expenses related to the Fed/OCC consent order remain elevated. We have modeled in expenses rising to $45B / $44B for 2021 / 2022 well above $42B in 2019,” noted Betsy Graseck, equity analyst at Morgan Stanley.

Citi also has #1 share in Transaction Banking, a business we estimate delivers a ~35% ROTCE for Citi. We believe Citi can add $17 a share in value by disclosing full quarterly details on this business. We bake half in $8, as Citi discloses half of what we would like to see. Citi should get more credit for its global diversification and it’s more resilient wholesale business.”

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