Citigroup Bulls Sets Sights on $100 Price Target After Blowout Q2 Earnings
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Yesterday's Q2 results had an immediate impact on market prices, as shown by TipRanks' charting data. By the close, C stock rose 3.7% and now trades at all-time record highs of approximately $90 per share. With performance and sentiment both positive, C stock bulls are already eyeing the psychological $100 barrier as the next hurdle.
The company's ongoing restructuring efforts are also bearing fruit. Citigroup's CET1 capital requirement was reduced by 0.5%, paving the way for increased dividends and share buybacks in the coming years.
Citigroup Q2 2025 Financial Highlights
Citigroup reported impressive Q2 2025 results, with EPS of $1.96, beating analyst estimates of $1.61 and rising 26% year-over-year. The strong performance was fueled by solid profitability across the Markets, Banking, Wealth, and U.S. Personal Banking segments, supported by a rebound in capital markets activity and lower credit provisions as U.S. unemployment stabilized in the 4.1–4.2% range.
However, net income declined in the Services and All Other (Managed Basis) segments, primarily due to higher provisions in Mexico. Overall, Citigroup's consolidated revenue rose 8% year-over-year, while operating expenses edged up just 2%, signaling improving efficiency, according to TipRanks data.
Citi wasn't done there. Return on tangible equity reached 8.7%, up 1.5% year-over-year, while tangible book value climbed to $94.16 per share, a 2.9% increase from the prior quarter. Meanwhile, the bank's CET1 capital ratio improved slightly to 13.5%, up from 13.41% in Q1 2025, further reinforcing its capital strength.
Citigroup Stress Test Results
Citigroup performed well in the Federal Reserve's 2025 stress test, ending the test period with a Common Equity Tier 1 (CET1) ratio of 12.5%—ahead of Wells Fargo (10.4%) and Bank of America (10.7%), although trailing JPMorgan Chase at 15.8%. This is an encouraging result, especially given that Citigroup trades at a lower tangible book value multiple (0.95x) compared to these major U.S. banking peers.
Adding to the positive momentum, Citigroup's ongoing restructuring efforts are yielding results. The bank announced a reduction in its regulatory CET1 requirement by 0.5%, bringing it down to 11.6%, which leaves Citigroup with a solid 1.9% capital buffer.
The U.S. bank also , significantly higher than the sector average of 1.4%. Moreover, the bank has also committed $3.75 billion to share buybacks in 2025 and maintains a disciplined capital strategy, with a payout ratio of 82% in Q2 2025.
Citigroup Valuation Breeds Bullish Sentiment
Citigroup has reaffirmed its target return on tangible equity (ROTE) of 10–11% for 2026—a bold aim, given that futures markets are pricing in 50 basis points of Fed rate cuts by the end of 2025, with another 50 basis points expected by mid-2026. This rate trajectory could pressure Citigroup's net interest income, which made up 70% of its Q2 2025 revenue.
Given the expected rate environment, I believe Citigroup is more likely to hit the lower end of its guidance, with a 10% ROTE in 2026. This would translate to roughly $9.50 in earnings per share, putting the forward P/E at a modest 9.5x. That's still a significant discount compared to JPMorgan Chase at approximately 14.7x, Bank of America at 11.2x, and Wells Fargo at 12.7x their respective 2026 earnings estimates.
While Citigroup's performance in the Fed stress test may justify a valuation discount compared to JPMorgan Chase, it still appears undervalued relative to peers like Bank of America and Wells Fargo, which performed worse in the same tests. Despite the stock's substantial gains in 2025, I remain bullish on Citigroup, as its valuation remains attractive.
Is Citigroup a Buy, Sell, or Hold?
Turning to Wall Street, Citigroup earns a Moderate Buy consensus rating based on 11 Buy and four Hold ratings over the past three months. Notably, not a single analyst sees Citigroup stock as a Sell. Currently, the average Citigroup stock price target is $95.32, implying a potential upside of ~5%.
Conclusion
Citigroup exceeded analyst expectations in Q2 2025 and reaffirmed its key profitability target for 2026. While achieving even the lower end of its 10–11% return on tangible equity (ROTE) goal may be difficult—especially given the outlook for further Fed rate cuts and the likely fading of the trading tailwinds that boosted first-half results—I remain bullish on the stock. Citigroup still trades at a significant valuation discount compared to major U.S. peers and delivered a strong showing in the latest Federal Reserve stress tests.
Even if the bank slightly undershoots its 2026 targets, shareholders will benefit from rising dividends and ongoing share repurchases, offering meaningful value as they await improved performance in 2027 and beyond. The recently reduced CET1 capital requirement, coupled with a 1.9% buffer above regulatory minimums, also supports the safety and sustainability of these shareholder distributions.
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