4. Citigroup Inc. (NYSE:C)
Analysts’ Upside Potential: 13.36%
The third largest U.S. lender, Citigroup Inc. (NYSE:C), has headquarters in New York, was established in 1812 and offers financial services and products. The segments that it operates through include Corporate/Other, Institutional Clients Group, and Global Consumer Banking.
Citigroup Inc. (NYSE:C) earnings for the second quarter of 2024, are comfortably above analyst consensus projections for both revenue and earnings, powered by strong performance in Markets and Investment Banking, which reported YoY revenue increases of 6% and 38%, respectively. Shares fell by about 2% in spite of the impressive results, though, amid investor worries about expenses, dividends, and market share and as Citigroup issued a warning that costs for FY 2024 may come in at the higher end of the range.
Diamond Hill Capital Long-Short Fund stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:
“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”
It is anticipated that the company’s strategic measures, such as its exit from foreign markets and its improvements in efficiency, will propel future development and profitability.
The improved results came two days after US regulators penalized Citi $136 million for making “insufficient progress” in resolving data management issues revealed in 2020. The lender had to prove to regulators that it was dedicating enough resources to those initiatives.
Citigroup continues to confront regulatory obstacles, including recent fines, which may impede its ambitions to undergo a more comprehensive transition and increase expenses. As a result, the possibility of additional cost overruns combined with the higher-end expense projection could put pressure on profitability. Furthermore, a slow recovery in particular business segments, as well as reliance on buybacks as a catalyst, may limit the turnaround strategy’s effectiveness if economic conditions worsen.
The Hold recommendation on Citigroup by DBS analyst Lim Rui Wen reflects worries about the company’s lack of near-growth catalysts, continuous restructuring, regulatory scrutiny, and high investment costs, all of which are predicted to hinder short-term financial performance.
However, it is one of the Best Financial Services Stocks To Buy Now since 15 analysts have given an average price target of $67.2 and an upside potential of 13.36% from the current stock price of $59.28. Analysts have rated C as a “buy.” Analysts considered 2024 a transitional year for Citi, as the company becomes leaner under CEO Jane Fraser’s turnaround.
