While the final weeks of 2023 saw almost non-stop rallying across equity markets, the first week of 2024 has been a little softer. The benchmark S&P 500 index has fallen for the past five sessions, and there's a general sense that Wall Street is taking a bit of a breather right now.
It's perhaps no bad thing, as the market was starting to feel a little frothy, and some profit-taking can help consolidate recent gains. But one thing is for sure: the broader sentiment is definitely risk-on right now and building.
Looking ahead into 2024, the prospects of rate cuts by the Fed are suddenly very real, and analysts haven't been slow about pointing out the stocks best positioned to benefit from such a move. Bank stocks are back in vogue, and here are two financial giants that were called out this week and are well worth considering.
Citigroup Inc (NYSE: C)
Whereas the S&P 500 index has been cooling every day this week, Citi kicked off 2024's trading with a solid day on Tuesday that sent shares to their highest levels in nearly eighteen months. Heading into Friday's session, they're now up a full 40% since October and looking as strong as ever.
The team at Wells Fargo expects Citi shares to double in price over the next three years, according to a note they sent out to clients on Monday. They reiterated their Overweight rating on the stock and upped their near-term price target from $60 to $70. Even with the recent rally, that points to a further upside in the region of at least 30%. Were shares to hit that in the coming months, it would have them back at 2021 levels and within touching distance of all-time highs.
We wrote yesterday about how declining rates can benefit a bank's balance sheet, and it seems that Citi is particularly well-positioned to benefit from such a macro environment. Much has also been made of the broader management and strategic overhaul that's been underway there, with efficiency now the name of the game both on paper and in practice.
This was a theme picked up on by Wolfe Research earlier this week when they also came out bullish on Citi and upgraded their rating on the stock to Outperform.
Lazard Ltd (NYSE: LAZ)
Alongside Citi, Wolfe Research also upgraded Lazard shares to Outperform this past week. The New York-headquartered investment banking company also had a strong finish to 2023, though its shares remain at best in the middle of the range where they've traded since going public nearly 20 years ago. They're still up 45% since the start of November, but the fact that they're also trading at 2006 levels isn't exactly inspiring at first glance.
For all that, though, Wolfe Research likes them as a 2024 pick, with analyst Steven Chubak calling them a "cyclical name with idiosyncratic tailwinds." A street-high price target of $50 should also be attractive to investors looking for a diamond in the rough, as it's pointing to a further upside of at least 35% from where the stock closed last night.
Lazard definitely has more work to do to prove that it's capable of not only getting to the top of the range that shares have been stuck in for years but also of actually breaking through it to new ground.
If there was ever a time for them to do this, however, it feels like the moment has come. Alongside Wolfe Research's upgrade this week, the team at Bank of America named Lazard stock last week as one of its top 24 picks for 2024. The stock's Relative Strength Index (RSI) is a little hot at 77, so watch for some near-term volatility as investors get used to the idea that Lazard is actually on the verge of rallying to multi-year highs.
