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Pro Analysis

Buy Citigroup as Trump ushers in higher rates, less regulation, Morgan Stanley says

Traders work at the Citigroup Inc. booth on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Nov. 11, 2016.
Michael Nagle | Bloomberg | Getty Images
Traders work at the Citigroup Inc. booth on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Nov. 11, 2016.

Investors should buy Citigroup on the prospect of a better growth environment due to the coming Republican and Trump administration's economic policies, according to Morgan Stanley, which upgraded the bank to overweight from equal weight.

"We are raising our EPS and Price Targets, and re-aligning our portfolio to bake in a higher forward curve and accelerating capital return post Republican sweep ... Republican Sweep is positive for all financial stocks. More growth, higher rates, less regulation, lower taxes," analyst Betsy Graseck wrote in a note to clients Monday.

"We're upgrading Citi...Stock has underperformed the group post elections on concerns over a DTA [deferred tax assets] write down and tough talk on global trade. ... We don't think a DTA writedown will impact Citi's strong capital return story."