UPDATE: Goldman Sachs Upgrades Citigroup to Conviction List-Buy, Raises PT

In a report published Friday, Goldman Sachs Group upgraded its rating on Citigroup

from Buy to Conviction List-Buy, and raised its price target from $42.00 to $49.00. Goldman Sachs noted, “We are upgrading C to CL-Buy (from Buy; $49, 12-month price target (from $42), 18% upside); best large-cap restructuring story. We believe Citi shares are mispriced given the company's core earnings power, especially considering further restructuring could generate additional upside for shares. Under new CEO Michael Corbat, we believe Citi is poised to improve returns and increase efficiency, with several potential avenues to achieve this through (1) the successful implementation of the restructuring plan announced in December ($1.1bn of cost savings, 4% accretive to EPS), which will improve Citi's core efficiency to a level consistent with peers, (2) a quicker rundown of Citi Holdings, either through reserve release or further asset dispositions, (3) improve efficiency in the consumer bank and (4) improve balance sheet and/or expense efficiency in Securities and Banking. Given these levers, we believe Citi could achieve a 10% ROTCE (its midterm target) in 2013 (vs. our published estimate of 8.9%), which believe could generate considerable momentum for shares given there would be justification for the stock to trade at tangible book value ($53 per share).” Citigroup closed on Thursday at $41.39.