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Citigroup Q1 Earnings Blow Past Estimates; Target Price $83

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Vivek Kumar
·2 min read
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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.

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.

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.”

Check out FX Empire’s earnings calendar

This article was originally posted on FX Empire

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