Goldman Retains ‘Conviction Buy’ on Citigroup Stock After Strong Q1 Performance
Following Citigroup Inc.’s (NYSE:C) impressive first-quarter earnings report, Goldman Sachs has reaffirmed its ‘Conviction Buy’ rating on the bank’s stock, maintaining a steadfast price target of $69.00. The endorsement comes in the wake of Citigroup’s earnings per share (EPS) for Q1 hitting $1.58, a notable hike that eclipsed both the consensus estimate of $1.04 and Goldman Sachs’s own forecast of $1.14. Adjusting for various one-off costs and adjustments, Citigroup’s core EPS soared to $1.87, significantly outstripping Goldman Sachs’s expected figure of $1.52.
The bank’s impressive financial results were largely fueled by a robust combination of higher-than-anticipated fee revenue and lower costs and provisions. Citigroup announced a pre-provision operating profit of $7.4 billion, marking a 14% increase from consensus estimates, spurred by heightened capital markets and services revenue alongside controlled expenses, despite a slight decline in net interest income (NII).
Moreover, Citigroup’s Common Equity Tier 1 (CET1) ratio experienced a modest uplift, reaching 13.5%, a figure that aligns with projections and underscores the bank’s solid financial footing as it kicks off the fiscal year. This performance is a positive indicator for Citigroup, suggesting that the bank’s full-year revenue guidance of $80-81 billion is attainable, based on the current revenue trajectory.
In reaffirming its full-year guidance, Citigroup’s outlook resonates with analyst expectations, with revenue forecasts matching the Street’s anticipation of $80.2 billion. However, in terms of NII excluding markets, a slight decline is expected, diverging from the Street’s more static predictions. The anticipated core expenses, excluding the FDIC special assessment, are pegged to be in the range of $53.5 billion to $53.8 billion, closely mirroring the consensus estimate of $53.7 billion.
Goldman Sachs looks forward to receiving more detailed insights concerning various dimensions of Citigroup’s operations. These include the management of deposit flows, loan growth amidst a prolonged high-interest rate climate, the implications of the ongoing organizational restructure on the expense trajectory for the latter half of the year, and the prospects for capital returns in light of potential adjustments to the Basel III endgame (B3E) proposed rules.
From a market standpoint, Citigroup boasts a market capitalization of $118.25 billion and a P/E ratio of 13.89 as of the fourth quarter of 2023. The bank’s resilience is further highlighted by a dividend yield of 3.43%, with a commendable track record of 14 consecutive years of dividend payments. This consistency underscores Citigroup’s appeal to income-focused investors.
As a prominent Banks industry player, Citigroup has demonstrated considerable strength, achieving a price total return of 18.43% over the last three months. This trend, coupled with positive profitability forecasts, underscores the optimism surrounding the bank’s performance.
For investors keen on exploring Citigroup’s financial nuances and prospective outlook in greater detail, numerous insights are available that delve into the company’s operations and market positioning. This rich repository of financial data and analysis is accessible, with exclusive offers providing added value to those looking to deepen their understanding of Citigroup’s market potential.
