Citigroup could double its stock price in the next three to four years, Wells Fargo analyst Mike Mayo told CNBC on Friday.
It's hardly a guarantee, Mayo said, but if the nation's third-largest bank gets a few things straightened out, it's possible.
"As long as Citi moves in the right direction, gets the higher returns that we expect, get the improved efficiency we expect, we think the stock could improve by double over the next 3 to 4 years," Mayo said on "Closing Bell."
Citigroup was trading around $73 on Friday, when it marked a new 52-week high of $73.42. It traded in the low $70s for much of July. It was in the low $80s in January 2018.
"Citi is doing some things well, some things not," Mayo said, pointing to the fact Citi grew revenues faster than expenses in the third quarter, despite interest rate cuts that, in general, put margin pressure on the banking sector. "That's fantastic."
Then there are the negatives.
"They still have worst-in-class efficiency, returns and stock market valuation," Mayo said. "But that's an opportunity. We think Citi is rowing in the right direction, but maybe they need to get a speedboat to get where they want to get to a little faster."
Mayo's comments Friday came one day after Citigroup named a new president, Jane Fraser, who also will replace Stephen Bird as the head of global consumer banking. Bird is leaving Citi after 20 years.
"A fresh set of eyes, with Jane Fraser as head of consumer, has the potential to help," said Mayo, who is head of U.S. large-cap bank research at Wells Fargo.
Fraser had been serving as the CEO of Citi's Latin America operations.
If leadership changes don't yield the type of improvement Mayo believes is necessary, the veteran banking analyst said, a second avenue for improvement exists: activist investor ValueAct. It owns about $1 billion worth of Citi stock, Mayo noted.
"If Citi doesn't move in the right direction, Plan B could be ValueAct exerts more pressure to possibly make changes at the top," Mayo said, in reference to CEO Michael Corbat.
Mayo said the indication is that Corbat will maintain his role for the next three to five years, at which point "Jane Fraser could be the first woman as CEO of a major bank."
"But everybody has to prove their job every day, and that includes Mike Corbat," Mayo said.
At the same time, Mayo expressed optimism about Citi's current positioning, which includes other recent changes at the executive level.
"That should only be good to maybe re-engineer Citi more aggressively," Mayo said.