Citigroup (C -1.90%) is woefully undervalued and its stock price is set to at least double before long, according to a senior analyst at prominent financial services firm Oppenheimer.

That company's prognosticator Chris Kotowski has lifted his price target on the stock by $10 to $106 per share, reiterating his existing buy recommendation. That new target is more than double the shares' Thursday closing price of $50.55. U.S. markets were closed Friday for the holiday.

Citigroup building interior.

Image source: Citigroup.

That optimism runs counter to the recent, rather bearish, developments in the U.S. banking sector. In their latest quarterly results, every major bank reported that they had dedicated much higher amounts than they had previously to loan-loss provisioning. This was done in the realistic anticipation that borrower defaults will rise significantly amid the extended fallout from the economic disruption wrought by the coronavirus pandemic.

More recently -- again, in response to the pandemic and the recession it has triggered -- the Federal Reserve restricted bank dividends for the third quarter, essentially capping them at their second-quarter levels. Additionally, the Fed ordered banks to suspend share repurchases for Q3, although that mandate will have less of an impact because many top institutions had already decided to halt stock buybacks.

The goal here, of course, is for banks to preserve capital in the face of a looming economic slowdown. The better capitalized a bank is during this slump, the hypothesis goes, the more likely it is that it will be able to survive it and continue to operate somewhat as normal, providing loans and supporting the economy.

On Thursday, Citigroup stock rose fractionally, more or less in concert with the broader equities market.