Citi Stock is Tops in Banking Sector and Could Rise Another 50%, Wells Fargo Analyst Says

A CitiBike dock in front of a Citibank branch in New York City. (Gabby Jones/Bloomberg)

Citigroup is the top-performing major bank stock this year with a gain of 33% and the advance is far from over, according to Wall Street’s biggest bull on the shares.

“It’s only just begun,” Mike Mayo, the banking analyst at Wells Fargo, tells Barron’s. “Citi is benefiting from an ongoing self-help, restructuring story.”

Citi shares, which fell 0.8% Monday to $92.65**,** have gained 33% so far in 2025, the best among the 20 stocks in the KBW bank-stock index. Mayo says the shares could be headed toward $150 by the end of 2027, or about 1.2 times his year-end 2027 estimate of tangible book value of $120 a share. His 12-month price target is $115.

Mayo reiterates his top pick call on Citi in a client note dated Sunday titled “Calling All Generalists—Dominant No. 1 Pick,” a reference to generalist portfolio managers whom Mayo says should consider buying the stock.

Mayo ticked off Citi’s positives: the best projected profit growth among peers in the coming years, higher returns, restructuring benefits and increased stock buybacks.

He sees Citi’s earnings rising to $10.15 a share in 2026 and nearly $12 a share in 2027, up from an estimated $7.60 a share this year. Citi’s second-quarter earnings were up 29% to $1.96 a share as revenues grew 8%. The stock now trades for about nine times Mayo’s 2026 estimate, a discount to peers.

Even with Citi’s move this year, it’s still among the worst in its peer group of megabanks over the past 10 years. And Citi is the only megabank trading below tangible book value, now $94 a share. Industry leader JPMorgan Chase trades for nearly three times tangible book.

Citi’s low valuation reflects anemic returns of about 8% on tangible book value while JPMorgan is over 20%. Citi CEO Jane Fraser has set a goal of 10% to 11% returns for next year with unspecified improvement after that. A 10% return on tangible book is the minimum that a big bank should be earning.

Mayo’s says Citi has spent three-quarters of what it will need for restructuring its operations and reaped only a quarter of the benefits so far. “The expenses are front-end loaded and the benefits are back-end loaded,” Mayo says.

Citi has simplified its structure to five business lines, exited 14 international consumer businesses and streamlined its management structure.

The five business units leverage off the bank’s global presence. They are led by Services, including its top-ranked global corporate cash management operation; Markets—its bond and equity trading businesses; Banking, investment banking and corporate lending, Wealth, including its private-wealth management operation, and U.S. personal banking, including the No. 3 U.S. credit-card lender.

Mayo says that 80% of Citi’s revenues now come from top-flight businesses, including Treasury services, investment banking and trading and credit cards.

Buybacks are rising with Citi projecting at least $4 billion in the current quarter, double the second-quarter figure. Mayo sees about $15 billion in repurchases over the coming 12 months, or about 8% of the shares outstanding. The dividend yield is about 2.5%.

“Citi’s past restructurings failed. This one will succeed,” Mayo says.

Write to Andrew Bary at andrew.bary@barrons.com