The selloff in U.S. stocks has deepened amid tariff and recession fears. Markets are trading near multi-month lows, and there looks to be no respite from growing macroeconomic concerns. President Donald Trump so far hasn’t seemed too perturbed by the recent market crash, which in part is due to the administration’s new tariffs.
Instead, Trump said, “There is a period of transition, because what we’re doing is very big.” Treasury Secretary Scott Bessent made a similar observation and said that the U.S. economy is going through a “detox period” and could “roll a bit.”
Meanwhile, while Trump did not rule out the possibility of a recession in 2025, saying, “I hate to predict things like that,” brokerages are raising the odds of a U.S. recession this year amid spending cuts and tariff uncertainty.
While a recession is not a base-case scenario yet, bank stocks could be among the biggest losers if one does hit. Bank of America (BAC) has warned of a massive downside in bank stocks in case of a recession. Notably, bank stocks have crashed, and after the slump on March 10, Citigroup (C) shares entered bear market territory after falling over 20% from their peaks.
Citi has a dividend yield of over 3.3%, which is among the highest among its large bank peers. In a previous article, I had noted that it would make sense to book profits in Citi after the stellar rally. Here, we’ll discuss whether the stock is a buy after the crash or if investors should stay away for now.
The Bull Case for Citi Stock
Over the last many years, Citi has been plagued by multiple issues, such as a complex reporting structure, a high-cost base, poor capital management, and regulatory woes. Thanks to these issues, Citi underperformed this century. The bank’s return and profitability metrics are much lower than those of its peers, which is also reflected in its valuations.
While a bank trading below its book value is usually a sign of undervaluation, Citi has been trading not only below the book value but also its tangible book value for quite some time now. The bank had a tangible book value of $89.34 at the end of 2024, while it now trades at just about $68. To be sure, Citi has traded at even bigger discounts to book value in the past. However, it has been trying to turn around under the leadership of CEO Jane Fraser, which should help bridge the gap.
As part of the transformation, Citi announced its exit from consumer banking in many international markets. It has also laid off employees and made the company more agile and transparent. The bank has also taken measures to address recurring regulatory woes.
Markets gave a thumbs up to these turnaround measures, which have started to show in Citi’s financials, and the stock has outperformed the KBW Bank Invesco ETF (KBWB) over the last three years.
C Stock Forecast
Of the 20 analysts covering Citi, 12 have a “Strong Buy” rating, while two rate the stock as a “Moderate Buy.” The remaining six analysts rate the stock as a “Hold” or some equivalent. C's mean target price of $91.28 is over 35% higher than the closing price on March 10.
Should You Buy Citi Stock Now?
Citi still has a long way to go in its turnaround. It has set a return on tangible common equity target of between 10% and 11% in 2026, which, while below the 11%-12% that it was previously targeting, is “a waypoint, not a destination,” per Fraser. During the Q4 earnings call, she added, “We intend to improve returns well above that level and deliver Citi’s full potential for our shareholders.”
The bank’s valuations are quite reasonable, and it trades at under 9x its expected earnings over the next 12 months. The healthy dividend yield is another plus, and Citi is expected to increase dividends over the next couple of years as its earnings improve.
While bank stocks bear the brunt in a recessionary environment, that is not the base case scenario for the U.S. economy, at least for now. I believe the recent crash has provided a good entry point into C stock, especially for someone comfortable with near-term volatility. It would, however, be prudent not to go overboard and instead build a position gradually, given the uncertain economic environment.
