New York, Feb 17, 2026, 14:20 EST — Regular session in progress.
- Citigroup shares rose roughly 3%, getting a boost after Morgan Stanley named the lender its top pick among large-cap banks.
- Financials led the way, while tech stocks lagged as investors showed caution over potential AI-driven upheaval.
- Attention shifts to the U.S. PCE inflation numbers due Feb. 20, with Citi’s investor day coming up on May 7.
Citigroup Inc (NYSE: C) climbed 2.9% Tuesday, hitting $114.06 in the afternoon after Morgan Stanley tapped it as their top U.S. banking pick. “We see another leg of outperformance ahead,” wrote analyst Manan Gosalia and his team. (Bloomberg)
Morgan Stanley bumped up its Citi price target to $152 from $135, sticking with its overweight call—that’s an expectation for the shares to outperform. The firm sees Citi progressing toward its 2026 return on tangible common equity goal of 10%-11%, and flagged the upcoming May 7 investor day, where management might lay out how they’ll get to mid-teens returns by 2030. Notably, the stock is trading at about 1 times 2027 tangible book value, which leaves out goodwill and other intangibles. (Investing)
Financials grabbed the spotlight during a whipsaw session following the long weekend. The S&P 500 financials index climbed 1.2%, while tech names stumbled again after the AI-driven rout. “It’s an indiscriminate selling in all things tech,” B Riley Wealth’s chief market strategist Art Hogan said. Rate bets were shifting, too. CME’s FedWatch tool showed Fed funds futures pricing in about a 52% shot at a quarter-point cut in June. (Reuters)
Citi bulls are sticking with a straightforward move: boost returns first, then let the valuation follow. Return on tangible common equity, or ROTCE, tracks how well a bank turns tangible shareholder capital into profits. As ROTCE climbs, investors tend to shell out more for every dollar of book value.
Morgan Stanley says Citi’s ongoing transformation still has runway, with legacy exit costs gradually receding as the process matures. Investors, though, have trouble factoring that in—those savings only trickle into quarterly expense reports, hard to spot all at once.
The analyst call landed as bank stocks kept tracking moves in the bond market. When yields dip, risk appetite tends to pick up and fee-heavy lines benefit, though there’s a trade-off—rate cuts also threaten to pinch net interest income, that critical gap between loan earnings and what banks shell out for deposits.
It’s a set of risks investors know well. A jump in consumer delinquencies, or a pullback in investment banking revenue, could put Citi’s earnings trajectory on ice—and freeze any hopes for a stock re-rating. Regulators, for their part, have the power to push banks into higher spending on controls regardless of management’s appetite for cost cuts.
On Feb. 20, the Commerce Department drops fresh numbers for the personal consumption expenditures price index—the Fed’s go-to inflation metric and a data point that has the power to jolt rate-cut predictions and move bank stocks. (Bureau of Economic Analysis)
With Citi, traders are zeroing in on anything that sheds light on how quickly costs are coming out, and which areas the bank might gain share—so long as it’s not loading up on unwanted risk. Once those signals dry up, the stock’s rally tends to sputter.
Citi’s investor day lands on May 7, with management expected to lay out fresh return and cost targets—key numbers for the company’s longer-term roadmap.
