Morgan Stanley has raised its price objective for Citigroup Inc. to $152 from $135, designating the bank as its top pick and retaining an overweight recommendation. The move comes as analysts point to improving profitability metrics and what they see as an appealing valuation relative to near-term earnings prospects.
InvestingPro data cited alongside the firm shows Citi trading at $114.09, with the analysts' high target set at $152. According to that data, Citi's Fair Value model still flags the stock as undervalued even after a strong run that produced a 34.43% total return over the past year.
At the center of Morgan Stanley's thesis is Citi's progress toward its stated return on tangible common equity goal. The bank is moving toward a 10% to 11% ROTCE target for 2026, and Morgan Stanley analyst Manan Gosalia expects Citi to present a roadmap at its investor day on May 7 that could show a route to mid-teens ROTCE by 2030.
The analyst and firm also expect Citi to regain market share across business lines as the bank's multi-year transformation reduces stranded costs. Morgan Stanley highlights valuation as a supporting pillar, noting Citi trades at roughly 1.0 times its projected 2027 tangible book value per share.
Those valuation observations are echoed in conventional metrics. Citi’s current price-to-book ratio stands at 1.01 and its price-to-earnings ratio is 15.8, figures identified in InvestingPro as modest relative to expected near-term earnings growth. The bank also yields 2.16% in dividends and has maintained dividend payments for 16 consecutive years.
In Morgan Stanley terminology, an overweight rating signals an expectation that Citi shares will outperform the average return of the stocks covered by the firm. The top pick label denotes the highest conviction within Morgan Stanley's coverage universe.
Operationally, Citigroup has been executing a transformation program focused on streamlining operations, shedding non-core businesses, and cutting expenses to lift returns. Those steps form the backdrop for the valuation and ROTCE trajectory that Morgan Stanley emphasizes.
Alongside the analyst upgrade, Citigroup has announced a set of corporate and strategic actions. The company plans to redeem $2.5 billion of its 1.122% Fixed Rate / Floating Rate Notes ahead of their 2027 maturity. That redemption is scheduled for January 28, 2026, and holders of the notes will receive full par value plus any accrued and unpaid interest.
The bank has also reorganized parts of its corporate banking leadership. Marcelo Marangon and Kaleem Rizvi were appointed as co-heads of corporate banking under the oversight of Vis Raghavan. In addition, Chief Executive Officer Jane Fraser’s compensation for 2025 was increased by 22% to $42 million after a year in which Citigroup’s stock outperformed other Wall Street banks.
On market views and product strategy, Citigroup’s rates desk has signaled that markets may be underestimating future U.S. inflation, a position that could make inflation-linked trades relatively more attractive. Separately, the bank is considering a credit-card product with a 10% interest-rate cap, a response tied to recent political pressure calling for a one-year cap on credit card interest rates.
Taken together, the valuation upgrade, operational restructuring and financial decisions paint a picture of a bank actively managing both its balance sheet and product offerings as it seeks higher returns and repositioning within the banking sector. These developments will be monitored closely by investors ahead of Citi’s investor day, when management is expected to provide additional clarity on medium-term profitability targets.