Citigroup Analysts Are Betting Big on These 3 Stocks—Should You?

Key Points

• Citigroup analysts have landed on three stocks to upgrade recently, and the reasons behind their decisions will lead investors to win picks.
• Backed by fundamental themes, double-digit upside is the only scenario that makes sense.
• Institutional buyers agree, as recent buying activity suggests.

Retail investors can really benefit from following the recent developments coming out of Wall Street, especially during volatile market times like these, which President Trump's recent trade tariffs have sparked. In all the uncertainty about what might happen to the United States economy, markets have lost track of what’s essential.

Fundamentals always pay as long as investors can pick the right stocks and pay a reasonable price for them. This is why today’s list of upgrades from Citigroup analysts is essential: Investors can reverse engineer some of the decisions behind these boosts and understand where and why the upside potential is in today’s uncertain market.

This list includes names like Chipotle Mexican Grill Inc. NYSE: CMG for exposure into the consumer discretionary sector or financial technology platform PayPal Holdings Inc. NASDAQ: PYPL to allow investors to ride the new business activity wave. Finally, as a net exporter commanding interest from economists and other analysts, there is construction sector supplier Caterpillar Inc. NYSE: CAT.

Analysts Aren’t Alone in Their Chipotle Optimism

Now that the stock trades at only 83% of its 52-week high, Chipotle has become a target for optimism reiteration and a buy for some institutional investors today. As of February 2025, those at Charles Schwab Investment Management decided to boost their holdings in Chipotle stock by 3.5%.

While this may not sound like much on a percentage basis, it was enough to bring the group's net holdings to a high of $511.9 million today, another bullish factor for retail investors to lean on when building their buying thesis. Of course, this buying activity did not come alone, as Citigroup analysts also reiterated their bullish view.

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These analysts started the month of February by reiterating their buy rating on Citigroup stock and placing a $70 a share valuation on it. This target would call for a new 52-week high for Chipotle and a net upside of as much as 22.3% from today’s low level.

Considering the company’s financials show a gross profit margin of 40.5% today, investors can rest assured that Chipotle has enough pricing power in the market and enough of its share to cushion an economic cycle change brought on by tariffs.

PayPal’s Dip Won’t Last

After a recent decline, PayPal stock has shown Wall Street analysts that it is still worth a second look. In their recent quarterly earnings results, investors can note that the company grew its active accounts to 434 million, or 2%, over the past 12 months, which also drove payment volume higher by 7%.

With this added activity, PayPal generated up to $8.3 billion in revenue, or 4% growth for the year. Given this, it is hard to see a scenario where the stock keeps trading this low, which is why analysts from Citigroup felt comfortable keeping their buy rating for it as of February 2025.

Not only did they keep this rating, but they now see PayPal stock’s valuation at $98 per share, a new 52-week high that would call for a net rally of 26.8% from where it has fallen to today. Backing this belief and optimistic view for PayPal is the Wall Street forecast for earnings per share (EPS) for the third quarter this year.

Analysts see PayPal generating up to $1.31 in EPS, a net growth rate of 10% from today’s $1.19 in EPS. Knowing that EPS growth typically drives stock price performance, investors can see a scenario where PayPal easily meets Citigroup analysts' current view.

Short Sellers Know Caterpillar Stock Is a Bad Bet

As of the past month alone, a clear sign of bearish capitulation can be spotted by investors, as Caterpillar stock’s short interest declined by as much as 8% during this period. The reason short sellers aren’t willing to stick to their bearish views is twofold.

First, Goldman Sachs analysts recommended exporting stocks in their 2025 macro outlook report, which makes sense given the upcoming trade tariffs. Second, it looks like Wall Street agrees with this view, as Citigroup analysts decided to also reiterate their buy rating for this stock.

Being on a streak, their $430 per share price target would mean yet another 52-week high for today’s list of upgrades and a potential upside of 18.2% from where the stock trades today, not usual for a company the size of Caterpillar. There is also another gauge investors can look to for this company’s rally, which is coming through valuations.

Because Caterpillar trades at a price-to-book (P/B) ratio of up to 9.0x today, it commands a steep premium to the rest of the industrial sector’s 4.5x average. Seasoned investors will see this as a positive since the market is always willing to pay premiums for the stock it expects will outperform the industry and broader markets.