Why Citigroup Is Still The Best Value Bet In Large-Cap Banking

Citigroup (NYSE:C) has kicked off earnings season with strong second-quarter 2025 results, prompting several Wall Street analysts to reiterate positive ratings and raise price forecasts for the banking giant.

The company’s performance was highlighted by an impressive beat on earnings per share and net interest income, driven by robust activity in its Markets and Services segments, along with disciplined expense management.

Analysts from Piper Sandler, UBS, and Keefe, Bruyette & Woods lauded Citi’s improved outlook, significant capital returns, and a clearer path towards achieving its return on tangible common equity (ROTCE) targets, despite the stock trading slightly lower on Wednesday following the initial report.

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Piper Sandler’s Scott Siefers maintained an Overweight rating, increasing his price forecast from $84 to $104. UBS analyst Erika Najarian reiterated a Neutral rating with a price forecast of $89. Meanwhile, Keefe, Bruyette & Woods analyst Christopher McGratty reiterated a Buy rating, setting a price forecast of $105. These analysts highlighted various factors contributing to their optimism.

Piper Sandler

Following Citigroup’s strong second-quarter fiscal 2025 earnings and updated guidance, Siefers raised his EPS estimates. The analyst increased his 2025 EPS forecast from $7.26 to $7.30 and 2026 EPS from $9.27 to $9.46.

He noted that Citigroup looks poised to emerge as one of this quarter’s standout performers. Core results came in above expectations, especially on NII, which rose 8.3% quarter-over-quarter, and expenses, which grew just 1.3% quarter-over-quarter, Siefers noted.

While credit costs of $2.8 billion were $90 million above the analyst’s forecast, and noninterest revenue missed by $136 million (mainly due to overestimating Markets), investment banking beat expectations, offsetting the shortfall.

Even after a strong year-to-date rally across universal banks, Citigroup remains the best value, trading at 96% of tangible book value (P/TBV), the only major bank still below TBV, Siefers noted. The analyst continues to see meaningful upside, supported by positive operating leverage, more substantial capital returns, and a more straightforward path to achieving 10%-11% ROTCE by 2026.

UBS

Citigroup delivered second-quarter fiscal 2025 EPS of $1.96, well above Najarian’s estimate of $1.64 and the consensus estimate of $1.63. She noted that the bank reported net interest income (NII) of $15.2 billion, beating expectations by about $1.2 billion, or roughly 50 cents per share. According to the analyst, the bulk of the NII upside came from Markets (about $900 million) and Services (around $200 million).

Although fee income came in lower than expected, the shortfall appears tied to FICC trading geography, where NII offset weaker fee performance, Najarian noted. Total Markets outperformed by 17 cents, led by FICC strength (+14 cents). In comparison, investment banking added 2 cents above expectations, driven by solid advisory and ECM performance, areas where Citi has not historically led compared to its DCM dominance, as per the analyst.

She noted that operating expenses came in 2 cents below forecast, and provisions were 3 cents lighter than expected. Citigroup now guides to the higher end of its previous revenue range at ~$84 billion, with full-year expenses projected at $53.4 billion, Najarian said. While consensus already reflects those figures, the analyst noted that strong PPNR (pre-provision net revenue) adds to the stock’s appeal, even amid crowded long positioning.

Citigroup returned about $2 billion in buybacks during the quarter and is expected to face significant attention around potential buyback levels of $3-4 billion per quarter in the second half of 2025, Najarian said. Regardless of how much guidance management offers on capital return, the analyst expects the stock to react favorably to the solid PPNR beat.

Keefe, Bruyette & Woods

McGratty raised its 2025 and 2026 EPS estimates for Citigroup by 5% and 3%, respectively, following a stronger-than-expected second-quarter fiscal 2025 performance and improved guidance. The analyst lifted 2025 EPS to $7.55 from $7.20 and 2026 EPS to $9.75 from $9.50, citing higher revenues and solid execution across key areas.

McGratty noted that Citigroup outperformed the broader bank index by 610 basis points on the day (+3.7% vs. BKX -2.4%), driven by its guidance for at least $4 billion in third-quarter fiscal 2025 buybacks, strong markets and investment banking results, lower net charge-offs (NCOs) in the card business, and continued positive operating leverage.

The analyst noted these developments increase its confidence in Citi reaching its 2026 ROTCE target of 10-11% (KBW estimate: 9.8%), supporting its long-term bullish thesis.

He noted that in the second quarter, NII beat expectations, supported by 3% average loan growth and favorable TTS deposit spreads.

Markets revenue posted the second-best quarter since 2020, rising 16% year-over-year and exceeding mid-quarter guidance, McGratty said. Investment banking also outperformed, growing 13% year-over-year, led by Advisory and ECM strength, the analyst pointed out.

Citi returned $2.0 billion in share buybacks, slightly ahead of KBW’s $1.8 billion forecast. Meanwhile, he added that branded card NCLs held steady at 3.5-4.0%, and retail services NCLs remained at 5.75–6.25%.

McGratty noted Citi raised its 2025 revenue guidance to ~$84.0 billion (previous: $83.1-$84.1 billion) and now expects NII ex-Markets to grow ~4% Y/Y (prior: 2–3%). The analyst added that Citi maintained expense guidance at ~$53.4 billion, subject to volume and revenue-related shifts.

McGratty emphasized that Citigroup remains the most compelling value play among large-cap banks, trading below tangible book value and best positioned to benefit from potential deregulation. He added that achieving its ROTCE goal by 2026 could be a key rerating catalyst, especially amid continued macro and geopolitical uncertainty.

McGratty noted that despite Citigroup’s stock being historically inexpensive, he believes near-term catalysts enhance its attractiveness.

He highlighted two primary reasons: First, Citi’s strong franchise and recent management adjustments position the firm to capitalize on revenue opportunities in investment banking and trading, particularly given expectations for improved market conditions post-election in areas like M&A, ECM, and FICC trading. Second, a potential reduction in regulations could not only alleviate some control and procedure risks for Citi but also offer substantial capital relief, with Citi being the primary beneficiary should the Basel III endgame be relaxed.

Price Action: Despite the broadly positive analyst sentiment, Citigroup’s stock was trading lower by 1.71% to $88.48 at last check Wednesday.

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