After a first-quarter earnings beat, Citigroup shares are trending higher. But, the stock still has some more room to run as the bank wraps up a strategic restructuring, according to Wells Fargo analyst Mike Mayo. The analyst said the overweight-rated stock is his top pick. He raised his price target on shares in the wake of the results to $160 from $150, suggesting 24% upside from Tuesday’s close. “Citi showed strong top-line double digit growth even amid its restructuring, which seems unique not only among banks but also by companies generally,” Mayo said Tuesday in a note to clients. Citigroup earned $5.8 billion, or $3.06 per share, in the latest period, a marked increase from the $4.1 billion, or $1.96 per share, it earned a year earlier. Revenue rose 14% to $24.63 billion in the same period, or well above analysts’ consensus estimate of $23.55 billion, LSEG data shows. The financial institution’s return on tangible common equity, which is a measure of profitability, also hit 13.1%, in the first quarter. That marks its highest level since 2021 and came in well above the firm’s goal of between 10% and 11% ROTCE. The strong results added to investors’ perceptions that Citi’s restructuring is helping its performance. Citi said about 90% of its overhaul is complete, and Mayo suspects more upside will come as it is completed. “This progress seems a key reason Citi expects lower costs for transformation, stranded costs, and severance,” Mayo wrote. Strategic shift Since early 2024, Citi has had a broad plan to boost its financial results and stock. The effort included a 10% workforce reduction, affecting roughly 20,000 employees globally. It has downsized its offices in the U.S., Indonesia, the Philippines and Poland. About 3,500 technology roles were cuts in China . As it made these changes, the stock has more than doubled over the past year. C 1Y mountain Citi shares have surged more than 100% over the past year. That marks an about-face from its performance at the start of the decade. Shares of the bank slid more than 40% between 2021 and 2023 as Citi faced stricter capital requirements and macroeconomic headwinds, among other challenges. Three factors will take its stock further: “targets, transformation, and top line,” Mayo said. Revenue growth was robust in the first quarter. Services revenue rose 17% year-over-year, while markets and banking revenue rose 19% and 15%, respectively. Over the same period, its wealth and cards businesses also notched gains of 11% and 4%, respectively. Mayo’s call aligns with consensus on Wall Street. Of the 24 analysts covering the bank, 21 have a buy or strong buy rating on the stock, per LSEG. Shares have surged nearly 23% over the past month.
