Goldman Sachs analysts remain bullish on Citigroup (C) following the investor day, with the company maintaining its mid- to long-term outlook and Buy rating on the stock.
While reaffirming its FY24 and mid-term financial targets, Citigroup reportedly impressed with its strategic focus on its services business, which is a key driver of future growth.
The company has “established strategic priorities in the services sector,” Goldman Sachs said in a statement. The segment is critical to Citigroup achieving its goals, as it accounts for “a quarter of group revenue growth through 2026” in Goldman Sachs’ model.
Analysts see reasons for optimism, highlighting Citigroup’s “unique market position” with a global network, strong client relationships and ongoing investments in technology. They believe these factors will contribute to “robust revenue growth and continued market share gains.”
An added benefit of the services business is that it serves as a gateway to Citigroup’s other offerings. “We anticipate opportunities for revenue synergies, particularly in the markets and banking sector,” Goldman Sachs explained in a statement.
While there remains some uncertainty in the market about Citigroup’s ability to meet its revenue growth targets, Goldman Sachs sees a clear path forward. They said the recent revenue growth “shows a much clearer path to significant profit growth.”
Goldman Sachs slightly raised its earnings per share estimate to reflect Citigroup’s guidance and revised earnings forecasts. Their 12-month price target also rose to $72 from $71 per share.
Looking ahead, successful implementation of the strategic plan is expected to drive “earnings per share improvements over time,” Goldman Sachs concluded, suggesting Citigroup’s transformation is gaining momentum.