UPDATE: Morgan Stanley Initiates Coverage On Citizens Financial Group

Morgan Stanley analyst Ken Zerbe initiated coverage of Citizens Financial Group Inc (NYSE: CFG) with an Overweight rating and a $27 price target.

Zerbe commented, "We think CFG can deliver steady profitability improvement through clearly defined initiatives, reaching a 10 percent ROTCE in 2016."

It is the company's potential to improve its ROTCE that is driving Zerbe's Overweight rating. He said there could be "meaningful upside" if Citizen's executes its improvement plans.

As drivers of this expected improvement, Zerbe listed:

• $750 million stock purchases over the next two years and a 30 percent dividend
• Higher fee income
• Aggressive loan growth
• Interest margin expansion
• Growth initiatives funded by aggressive cost cuts