Have you ever watched a stock that everyone wrote off for years suddenly catch fire and make you wonder why you didn’t buy the dip sooner? That’s exactly the feeling creeping in with Citigroup right now.
After what feels like a decade of restructuring, cost-cutting, and regulatory headaches, one of Wall Street’s heaviest hitters just said the turnaround is real. And they’re putting serious money behind that conviction.
Why JPMorgan Just Went All-In on Citigroup
This morning, JPMorgan analyst Vivek Juneja upgraded Citigroup from Neutral to Overweight and lifted his price target all the way to $124 for December 2026. From yesterday’s close that implies roughly 11% upside – not life-changing on its own, but for a mega-cap bank trading at a discount to peers, that’s the kind of catalyst investors dream about.
More importantly, Juneja believes this isn’t a one-quarter wonder. He’s calling it a multi-year journey where profitability will keep climbing higher than the rest of the sector. In plain English? The heavy lifting might finally be paying off.
“Valuation has improved from the lows and improvement in profitability will be the key driver to further upside — this is a multi-year journey for Citi.”
JPMorgan analyst note, December 2025
Let’s unpack what’s actually changing under the hood.
1. Return on Tangible Common Equity Is Finally Moving the Needle
If you’ve followed big banks at all, you know RoTCE (return on tangible common equity) is the metric that matters most. It tells you how efficiently a bank turns shareholder equity into profit, stripped of all the accounting fluff.
For years Citigroup languished in single digits while peers like JPMorgan Chase and Bank of America comfortably printed 15-18%. That gap was the main reason the stock stayed cheap.
Now management has a credible path to mid-teens RoTCE over the next few years. And according to JPMorgan, Citigroup should actually outpace most peers in the speed of that improvement. That’s a massive narrative shift.
2. Trading at a Discount That No Longer Makes Sense
Here’s the part that still blows my mind: Citigroup currently trades at roughly 1.1 times tangible book value. The other money-center giants? Closer to 1.7–2.0x or higher.
Think about that. You’re buying essentially the same global franchise – cards, wealth management, investment banking, markets – for almost half the price per dollar of hard assets. Once the profitability gap closes even halfway, that discount should evaporate.
- 1.1x TBV today
- Historical average closer to 1.6x
- Simple re-rating alone could deliver 40%+ upside before earnings even grow
Sometimes the market is just slow to recognize when the story changes.
3. Tailwinds Lining Up for 2026 and Beyond
Three big macro and regulatory themes look ready to play straight into Citigroup’s strengths:
- Solid economic growth – less credit losses, higher loan demand
- Re-accelerating M&A and capital markets – Citigroup has outsized exposure to investment banking fees
- Friendlier regulation – progress on consent orders means lower “stranded costs” and eventual capital return acceleration
Add in the ongoing efficiency push (expense ratio falling every quarter) and the wind is clearly shifting to Citigroup’s back for the first time in ages.
What About the Risks? (Because There Are Always Risks)
Look, I’m excited, but I’m not blind. Citigroup still has baggage.
The bank is still working through multiple consent orders tied to risk management and data governance. A severe recession could stall the profitability march. And let’s be honest – execution risk is baked into the discount for a reason – management has disappointed investors plenty of times before.
That said, many of those risks feel increasingly priced in, while the upside from successful execution feels under-appreciated. That’s exactly the asymmetry value investors hunt for.
How Citigroup Fits in a Diversified Portfolio Today
In my own accounts, I’ve been adding to financials selectively this year. Regional banks still scare me with their commercial real estate exposure, but the money-center complex looks rock solid.
Citigroup gives you:
- Global diversification most U.S. banks lack
- A decent 2.9% dividend yield that should grow as capital ratios improve
- Optional upside from both multiple expansion and earnings growth
- Downside protection from trading near tangible book
That combination is getting harder to find in a market trading at 22x forward earnings.
The Bottom Line
Wall Street upgrades happen every day. Most are noise. But when one of the sharpest bank analysts in the business says the multi-year profitability turnaround is real and sticks a 25% higher price target on the stock… you pay attention.
Citigroup shares are already up almost 60% year-to-date, yet they still trade at a meaningful discount to peers with a clearer path to higher returns. If management executes even reasonably well from here, the next leg higher could be substantial.
Is it a slam-dunk? No. But the risk/reward finally feels tilted in shareholders’ favor for the first time in a very long while.
Sometimes the best investments are the ones everyone gave up on… right before everything clicks.
Disclosure: The author holds a long position in Citigroup common stock at the time of writing.
