On Thursday, Piper Sandler displayed confidence in Citi stock, raising its price target from $80.00 to $83.00 while reaffirming an Overweight rating. The adjustment follows the bank's fourth-quarter earnings of 2024 and updated guidance, which prompted the firm to revise its earnings per share (EPS) estimates for the coming years.
The firm's analyst highlighted the reasons behind the increased price target, stating that the EPS estimates for 2025 and 2026 have been adjusted upwards. The 2025 estimated EPS has been increased from $7.17 to $7.31, and the 2026 forecast from $8.43 to $9.04. The new price target of $83 is based on these enhanced EPS projections, which are approximately 11 times the estimated 2025 EPS.
Citi's performance in the fourth quarter was notably solid, especially in terms of net interest income (NII), which showed a 2.8% increase from the previous quarter. Additionally, the bank successfully reduced expenses by 1.2% on a sequential basis. While credit costs were higher than anticipated, amounting to $2.6 billion, noninterest revenues fell short of expectations. Despite these mixed results, the core outcome was viewed as better than initially modeled by Piper Sandler.
The Overweight rating by Piper Sandler is reiterated, with the firm emphasizing Citi's improving profitability story, potential opportunities in capital management, and what it considers to be a heavily discounted valuation. The analyst's comments reflect a belief in the bank's ability to maintain a positive trajectory in the financial markets.
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