Citizens Financial (CFG): Underappreciated Earnings Power and Improving Credit Outlook Support Buy Rating and Path to Higher ROTCE

Citi analyst Keith Horowitz has maintained their bullish stance on CFG stock, giving a Buy rating on December 17.

Keith Horowitz has given his Buy rating due to a combination of factors that reinforce a constructive medium-term outlook for Citizens Financial. He expects a clear path to higher returns on tangible common equity, supported by improving net interest margin and net interest income, and sees management’s “Reimagine the Bank” investments as laying the groundwork for stronger profitability as associated costs taper off by 2027. His forecasts call for solid double-digit growth in both NII and fees in 2026, with fee income buoyed by better capital markets and wealth management trends, while loan and deposit balances expand slightly faster than the broader economy. In his view, the bank’s expense trajectory is now better anchored by management’s 4–4.5% year-over-year cost guidance for 2026, which the market has not fully incorporated.

Horowitz also argues that credit quality assumptions are conservative, projecting net charge-offs in the mid-30 basis point range, supported by improving credit indicators and management commentary, which leaves room for positive credit surprises. He notes that investor sentiment has grown more favorable over the past quarter as confidence in management’s execution has strengthened. With his valuation assuming a 15% ROTCE versus a lower level implied by the current share price, he believes the stock offers an attractive risk/reward profile as Citizens progresses toward its longer-term goal of generating 16–18% returns. This combination of underappreciated earnings power, disciplined expense management, and improving credit outlook underpins his Buy recommendation on CFG.

In another report released on December 17, KBW also maintained a Buy rating on the stock with a $68.00 price target.