Citi stock price target raised to $134 from $129 at Morgan Stanley

Morgan Stanley raised its price target on Citigroup to $134 from $129, maintaining an Overweight rating, driven by a 4% increase in its 2027 EPS estimate to $12.18, citing strong net interest income and expense ratio improvements. This upgrade follows Citi's robust Q3 2025 earnings, which significantly surpassed analyst expectations with adjusted EPS of $2.24 and revenue of $22.09 billion. Concurrently, BofA Securities also increased its price target to $120 from $115, maintaining a Buy rating, reflecting broad analyst confidence in Citigroup's financial health and operational efficiency.

Analysis

Citi reported robust Q3 2025 adjusted EPS of $2.24, significantly exceeding the $1.75 forecast, alongside revenue of $22.09 billion, surpassing the $21.05 billion expectation. This strong performance, driven by a 4-5% revenue increase and 0.2-2% expense reduction, prompted immediate positive analyst revisions. Morgan Stanley raised its price target to $134.00 from $129.00 with an Overweight rating, while BofA Securities increased its target to $120 from $115, maintaining a Buy rating.

Morgan Stanley's target increase is based on a 4% rise in its 2027 EPS estimate to $12.18, applying an 11x earnings multiple, reflecting a high-quality earnings beat in net interest income and improved expense ratios. The firm projects Citigroup's Return on Tangible Common Equity (ROTCE) to steadily improve, reaching 10.3% in 2026, 11.3% in 2027, and 11.8% in 2028.

Crucially, Morgan Stanley anticipates an expansion of Citi’s price-to-tangible book value multiple from the current 0.8x 2027 tangible book value to 1.1x. This expansion is contingent on the bank's execution of efficiency improvements, including reducing transformation expenses and achieving an expense ratio below 60% by year-end 2026. These developments underscore Citigroup's robust financial health and operational efficiency, contributing to its impressive 64% return over the past year.

Key Decisions for Investors

• Consider maintaining or initiating a long position given the strong Q3 2025 earnings beat and positive analyst revisions from Morgan Stanley and BofA Securities
• Monitor Citigroup's execution on efficiency improvements, particularly the reduction of transformation expenses and achieving an expense ratio below 60% by year-end 2026, as these are critical for realizing projected multiple expansion
• Evaluate the stock's current valuation against Morgan Stanley's anticipated 1.1x price-to-tangible book value multiple to assess potential further upside