Citizens Financial Group Faces Mixed Results Amid Strong Market Performance
Valued at $20.2 billion, Citizens Financial Group, Inc. (CFG) is based in Providence, Rhode Island, and operates within the banking industry. The bank provides a range of retail and commercial banking products and services across the U.S., catering to individuals, small businesses, and institutions.
Strong Gains but Recent Struggles
Over the last 52 weeks, CFG’s shares have significantly outperformed the broader market. The stock has surged 78.2%, while the S&P 500 Index ($SPX) has seen a 36.8% increase. Year-to-date in 2024, CFG shares are up 38.2%, compared to a 25.7% gain for the SPX.
Additionally, CFG has surpassed the Financial Select Sector SPDR Fund’s (XLF) 46.1% return over the past year and a 30.8% increase so far this year.
Q3 Results Fall Short
On October 16, CFG shares dropped 2.5% following disappointing Q3 earnings, where adjusted revenue fell to $1.9 billion, missing analysts’ forecasts. The bank reported a 10.1% decline in net interest income (NII) compared to the previous year, largely due to a shrinking net interest margin (NIM) and a decrease in average interest-earning assets. Furthermore, both loan and deposit balances did not meet analyst expectations, indicating a drop in overall customer activity. Concerns about credit quality were heightened by a 25.5% rise in net charge-offs and a 28.2% increase in non-accrual loans.
For the current fiscal year ending in December, analysts are projecting CFG’s EPS to grow 2.2% year-over-year to $3.20. However, the company’s earnings surprise history has been inconsistent; it exceeded consensus estimates in just one of the last four quarters while falling short in three others.
Analyst Ratings and Future Outlook
A survey of 20 analysts covering CFG reveals a consensus rating of “Moderate Buy,” consisting of 10 “Strong Buy” ratings, one “Moderate Buy,” and nine “Holds.”
On October 18, RBC Capital analyst Gerard Cassidy adjusted Citizens Financial’s price target to $45 while keeping an “Outperform” rating. Although the bank’s Q3 earnings beat expectations due to lower expenses, this was counterbalanced by lower noninterest income and net interest income, amid noted weaknesses in credit quality despite robust capitalization.
Currently, CFG’s stock trades below the average price target of $46.92. The highest price target of $50 suggests a potential upside of just 9.1% from its current levels.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are intended solely for informational purposes. For more details, please view the Barchart Disclosure Policy here.
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