Citigroup Inc.'s chief executive, Vikram Pandit, has said for some months that Citi has turned the corner; now Wall Street finally seems to agree.

On Wednesday, Citi's stock closed above $5 for the first time since Aug. 28, 2009, a psychological milestone. On Thursday, it closed at $5.04, down 0.8%.

The $5 threshold has lost some of its financial significance for stocks during the financial crisis. It used to be a barrier for mutual funds, which often could not invest in stocks that trade below $5, but those policies were largely dropped during the financial crisis, said David Trone, a JMP Securities analyst.

Still, for Citi, finally achieving a stock price perch at $5 demonstrates Wall Street's recognition of the bank's return to profitability last year, and the departure of the Treasury Department as a Citi common shareholder.

"Pandit has done a remarkable job in making the company more transparent … cleaning up problem assets and positioning the company to take advantage of global growth opportunities," said Frank J. Barkocy, director of research at Mendon Capital Advisors. Pandit is "getting at least some of the recognition he deserves."

But Citi continues to face considerable challenges in terms of financial goals and market capitalization. On Sept. 30, Citi's book value, a benchmark for stock prices that reflects assets minus liabilities, was $5.60 per share. (Book value excluding intangible assets like goodwill was $4.44.)

Arch-rival JPMorgan Chase & Co. closed at $44.45 on Thursday, about 5% above book value of $42.29. But Citi is not the only ugly duckling anymore: Bank of America Corp., the nation's largest bank by assets and deposits, closed at $14.77, about 30% below book value of $21.17. It struggles with concerns about the regulatory impact on its U.S. consumer business and soured mortgages it sold to private investors that it might have to take back.

"The next leg up in [Citi] shares will occur when investors gain more visibility with the required capital levels and signs regulators are comfortable with the company growing once again," said Todd Hagerman, an analyst with Collins Stewart LLC.

Anthony Polini, a Raymond James & Associates analyst, said he expects Citi to hit $6.50 by the end of this year.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.