JPMorgan upgraded Citigroup (NYSE:C) to Overweight from Neutral and raised its price target to $124 from $107, citing expectations for improving profitability driven by a solid economic backdrop and strong market activity.

The analyst said Citi was positioned to benefit more than peers from favorable macro conditions due to its revenue mix, while ongoing transformation efforts were expected to further enhance returns. These initiatives included progress on regulatory consent orders, a declining efficiency ratio, reductions in stranded costs, and the continued drawdown of deferred tax assets.

JPMorgan said these factors should support a steady improvement in Citigroup's profitability over time and drive returns on tangible common equity higher relative to peers.