KBW's 2025 Financial Stock Picks: Citigroup as the Top Pick
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January 9, 2025
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As we step into 2025, Wall Street’s optimism is still alive and well, with many hoping the bull market we saw last year continues. Keefe, Bruyette & Woods (KBW) is particularly bullish on financial stocks, including Citigroup and Synchrony Financial. While the market’s overall path remains uncertain due to questions surrounding the Fed’s rate hike trajectory, the momentum from 2024’s impressive 23% S&P 500 gain (for the second year in a row, mind you) seems to be holding strong.
Here are some of the companies KBW has listed as their top picks, all of which have received an “Overweight” rating:
After Citigroup ($C) saw a solid 36% rally in the past year, KBW analyst David Konrad sees further upside potential. He believes Citi’s stock is trading at a roughly 30% discount compared to its peers, particularly when looking at its 2026 P/E ratio. The big driver here could be the potential shift in rules about credit capital, which would impact how banks like Citi manage their capital. Konrad has set a target price of $85 for Citigroup, implying a solid 17% upside from current levels.
Synchrony Financial ($SYF) has seen a massive 72% surge over the past year. Analyst Sanjay Sakhrani is projecting a 21% upside, with a target price of $82. One major catalyst for Synchrony is potential regulatory easing, particularly around credit card late fees (remember Biden’s proposal to cap fees at $8? That didn’t fly, and with Trump potentially easing regulations, we could see some headroom here).
Bank stocks have always been a key part of the conversation in U.S. equity markets, and with talk of lighter regulatory policies under a Trump administration, many investors are betting that the sector stands to gain. It’s not just about higher capital market activity, but also the potential for easier rules that could boost earnings.
Other names on KBW's recommended list include Charles Schwab ($SCHW), which has taken a dip recently, and Jones Lang LaSalle ($JLL), which is a bit of a wildcard but still getting the “buy” rating. $HG
Looking at these picks, it's clear that KBW is betting on the financial sector to continue riding the tailwinds of regulatory easing and strong market activity. While there's definitely upside potential for stocks like Citigroup and Synchrony, there’s always that risk of what if—what if regulatory relief doesn’t materialize, or what if the broader market hits a rough patch? Personally, I’m cautiously optimistic. Banks have a lot of room to benefit from changes in regulations, but as always, I’d advise keeping a close eye on the Fed’s moves and any signs that the market might be overheating.
What do you think? Are you buying into KBW’s picks for 2025?
#2025 Investment Outlook: What's Ahead?#$Citigroup Inc.(C)#$SYNCHRONY FINANCIAL(SYF)#$The Charles Schwab Corporation(SCHW)#$Jones Lang LaSalle Inc.(JLL)#$Hamilton Insurance Group Ltd. Class B Common Shares(HG)