Shares of Citigroup (NYSE:C), America's third-largest bank by assets, got off to a good start this morning, rising nearly 5% in the first hour of trading.
The stock moved higher as analysts at Morgan Stanley maintained their overweight rating, meaning the company's stock should perform better in the future. Morgan Stanley also raised its price target to $81, which is 18% higher than its current levels.
Citigroup's stock is also rising as new CEO Jane Fraser formally takes the reins today from departing CEO Michael Corbat. It would appear the market is optimistic on Fraser, the first woman to lead a major Wall Street bank.
Fraser has her work cut out for her after regulators last year slapped the bank with a $400 million civil penalty for long-standing deficiencies with its internal controls related to compliance, data, and risk management.
Those struggles were on full display in 2020 when Citigroup accidentally wired $900 million to the wrong parties. Recently, a U.S. district court judge dealt a blow to the bank, ruling that several of the parties didn't have to return $500 million of that amount.
Citigroup has for years underperformed its peers, and correcting its internal control issues is no small task. The good news is that the money spent on the regulatory issues is also essentially a big investment in the bank that should result in efficiencies.
Fraser is also planning to change the bank's overall strategy, which could mean focusing on business lines with better long-term profitability. Currently trading below tangible book value, Citigroup is a stock I definitely like at these levels, despite the challenges ahead.