Major credit card companies are gearing up for a potential economic downturn, as recent earnings reports indicate a rise in customer delinquencies returning to pre-pandemic levels. Industry leaders like JPMorgan Chase (JPM), Citigroup (C, Financial), Synchrony (SYF), and U.S. Bancorp (USB) are taking various measures to mitigate potential risks.
JPMorgan Chase and Citigroup have bolstered their financial safety nets by adding to their reserve funds. This move is part of a broader strategy to prepare for possible future losses from customers unable to meet their financial obligations. At the same time, Synchrony Financial is adopting stricter lending criteria to minimize exposure to risky borrowers.
In contrast, U.S. Bancorp is shifting its focus toward attracting more affluent customers, aiming to reduce its vulnerability to rising default rates. By targeting a customer base less likely to default, U.S. Bancorp hopes to maintain healthier loan balances during turbulent economic periods.
These proactive strategies underscore the credit card industry's cautious outlook as they navigate a challenging financial landscape. The companies are seeking to protect their portfolios from the anticipated economic headwinds while adjusting to evolving consumer credit behaviors.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for Citigroup Inc (C, Financial) is $84.18 with a high estimate of $110.00 and a low estimate of $70.00. The average target implies an upside of 30.41% from the current price of $64.55. More detailed estimate data can be found on the Citigroup Inc (C) Forecast page.
Based on the consensus recommendation from 21 brokerage firms, Citigroup Inc's (C, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Citigroup Inc (C, Financial) in one year is $59.91, suggesting a downside of 7.19% from the current price of $64.55. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Citigroup Inc (C) Summary page.
