Despite its underwhelming 2015 thus far, one key analyst has upgraded Citigroup Inc. (NYSE: C). Simply put, the valuation now appears to more adequately discount Credit Suisse’s concerns, without accounting for the fundamental progress made year to date.

Credit Suisse raised its rating on Citigroup to Outperform from Neutral with a $62 price target, indicating more than 20% upside to fair value.

With fully phased in common equity tier 1 ratio (CET 1) at 11.4% at June 30 (10.5% required) and increasing at an above average pace through earnings, deferred tax asset usage and risk weighted asset stability, Citi has the capacity for a material step up in capital return. Reducing earnings volatility, passing 2016 comprehensive capital analysis and review (CCAR) and the Federal Reserve’s willingness to approve higher payouts will be key. Citi is expected to pay out 25% of EPS in 2015, and Credit Suisse is forecasting 45% in 2016 with an increase to 60% in second half 2016 post CCAR.

The results from the first half of 2015 were confidence building, with a 10.5% return on tangible common equity (ROTCE) on a tangible common equity ratio of 9.9%.

According to the brokerage firm, macro factors are a clear headwind, including China, emerging markets, oil prices, market volatility and low interest rates. For Citi in particular, Credit Suisse has residual concerns related to the bank’s revenue growth prospects, and the economic wind down of Citi Holdings.

In its report, Credit Suisse said:

An improved macro backdrop would help as should the articulation of new financial targets for 2016-we expect management to raise the bar to a 100 to 110bps ROA, a mid-50s Citigroup efficiency ratio and a target ROTCE of 10% to 12%.

So far in 2015, shares of Citigroup have underperformed the broader markets. Year to date, the stock is down 6.4%, but it is only down 2.5% in the past 52 weeks.

Shares of Citigroup were down 0.5% at $50.29 Monday morning, in its 52-week trading range of $46.60 to $60.95. The stock has a consensus analyst price target of $65.14.

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