BofA analyst raises price target for Citi to $100, takes bullish view of Fraser’s restructuring

It’s been three years since Jane Fraser unveiled her strategic vision for Citi and, during that time, the CEO has come under significant criticism for her overhaul of the country’s third biggest bank. But a Bank of America analyst thinks Fraser is giving the bank a shot at becoming competitive, according to a June 26 research note.

With $2.5 trillion in total assets, Citi is one of the nation’s largest banks, employing around 229,000 full-time workers as of last year. Fraser took over as Citi CEO in March 2021, and is widely considered the most powerful woman on Wall Street. (This year, Fraser ranked as the third most powerful woman in business, according to Fortune’s Most Powerful Women’s list.) Citi’s stock has gained about 22% since she joined the bank.

Citi is no stranger to overhauls. In the late 1990s, the bank underwent a major realignment after Citicorp’s merger with Travelers which created Citigroup. Citi reorganized again after the 2008 financial crisis and then, in 2019, it undertook another restructuring.

Fraser has come under considerable scrutiny for the latest Citi revamp. She’s faced pressure from analysts, regulators and even internal dissent. But Ebrahim Poonawala, a BofA research analyst, thinks “this time is different,” which is the title of his June 26 note.

“We consider Citi’s turnaround as among the most complex in the corporate world, but Fraser had undertaken actions (such as international consumer exits, balance sheet de-risking, tech/personnel investments, streamlining businesses, hiring external talent) that gives Citi a fighting chance of becoming competitive, in our view,” Poonawala wrote in the note. Poonawala reiterated a “Buy” rating for Citi and boosted his price target to $100 from $89.

Fraser’s big moves at Citi include divesting nearly all of Citi’s international consumer banking franchises, exiting non-core operations, and overhauling leadership. Last year,  Citi hired Vis Raghavan, ex-head of global investment banking at JPMorgan Chase executive, to lead global banking. It also added Tim Ryan, of PwC, to lead technology and business enablement, as well as Andy Sieg, of Merrill Wealth Management, to head up wealth.

Over the past year, Citi’s five businesses are tracking improved profitability, Poonawala said, adding that wealth and banking have acquired a sharper focus under new leadership. Absent a severe macroeconomic shock, the analyst expects Citi’s momentum to continue, “paving the way for management to deliver a more than 10% return on tangible common equity (ROTCE) on a sustainable basis starting in 2026.” ROTCE is a metric used to compare banks and how well they are using tangible common equity to generate profits.

In the first quarter, Citi’s efficiency ratio in each of its core business units declined versus the year ago quarter, Poonawala said. This reflects management’s focus on controlling expenses, he said.

This story was originally featured on Fortune.com