Recent times have seen Citigroup Inc and its banking counterparts grappling with an upsurge in delinquencies within the commercial real estate domain.

Amidst these challenges, Citigroup stands out for its potential to implement cost-saving measures and exhibits a noteworthy capacity for stock repurchase or balance sheet expansion, particularly under the scenario of significant alterations in Basel 3 Endgame (B3E) regulations, as acknowledged by Goldman Sachs.

Renowned Citigroup analyst Richard Ramsden has taken a bullish stance by pushing Citigroup’s rating from Neutral to Buy, with a steady price target at $68.

Ramsden’s bullish outlook stem from the belief that Citigroup is poised to witness revenue growth, with a compounded annual growth rate (CAGR) of 4%, culminating in a projection of $85.7 billion by 2026, surpassing existing Street predictions.

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Highlighting the crux of his reasoning, the analyst remarked, “We anticipate that Citigroup’s medium-term objective of cost savings in the range of $2.0-2.5 billion could materialize, alongside our conviction that the ongoing streamlining of organizational processes (including a reduction in headcount by 20k), eradication of stranded expenses, and the unlocking of productivity dividends from transformation efforts, could ultimately bring about a moderation in expenses by the close of 2026.”

Furthermore, Ramsden postulated that Citigroup’s costs are likely to plummet from approximately $54.3 billion in 2023 to about $51.8 billion in 2026, constituting a 2% shortfall compared to the current Street consensus, hovering around $52.7 billion.

Elaborating on anticipated moves ahead, the analyst expressed, “We envisage a forthcoming uptick in buybacks, with an incremental $1 billion/$4 billion in 2024E/25E year-over-year, departing from the modest base of 2023 (which witnessed a 40% yearly decline in buybacks), propelled by an optimistic economic landscape as well as the upswing in Citigroup’s capital generation as one-time expenses fade.”

Regarding the market performance, Citigroup’s share price had receded by 1.11% to $57.12 at the moment of publication on Thursday.

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