Citigroup To Resume Share Buyback Plans in 1Q; Shares Climb 5%

Citigroup said on Friday that it will resume its share buyback plan and will continue to pay a $0.51 dividend per share from 1Q through 3Q of fiscal 2021. Shares gained 5.4% in after-hours trading.

Citigroup’s (C) announcement comes after the Federal Reserve released a stress test report enabling the investment bank to take certain capital actions during Q1 of fiscal 2021, subject to certain restrictions.

The Fed also extended the time period for notification regarding the recalculation of Citigroup’s Stress Capital Buffer requirement through Mar. 31, 2021.

“Citi is committed to continuing to play an active role in supporting the economic recovery. At the same time, we will continue our planned capital actions through the remaining quarters of the 2020 CCAR cycle (i.e., 1Q 2021 through 3Q 2021), which include quarterly common dividends of $0.51 per share, and it is our intention to resume repurchases during that timeframe as well, subject to financial conditions, any future changes to the Stress Capital Buffer and approval from Citi’s Board of Directors.” said Citigroup CEO Michael Corbat.

The stock has lost 26% year-to-date and is trading at a discount of 29% to its 52-week high. (See C stock analysis on TipRanks)

Piper Sandler analyst Jeffery Harte last week raised the stock’s price target from $56 to $68 and reiterated a Buy rating. This target implies that investors could be yielding a 15% gain from the shares over the coming 12 months.

Harte views the stock as attractive in light of the company’s recent management commentary, which the analyst believes improves earnings visibility. The stock is “undervalued and attractive heading into 2021,” he summed up.

From the rest of the Street, the stock scores a Strong Buy based on 13 Buys and 3 Holds. The average price target of $66.23 implies upside potential of 12% to current levels.