Investing.com – Citi analysts unveiled their equity strategy for the first quarter of 2025, emphasizing a more balanced approach amid evolving macroeconomic conditions and policy uncertainties.
SIGN (Sector & Industry Group Navigator) identifies key focus areas for investors as the year unfolds.
The strategy includes a mix of growth, cyclical and defensive, and adjusting to mixed signals in the economy.
Citi analysts warn that “Trump-related policy uncertainty during the first quarter” could amplify market noise.
They suggest investors prioritize sectors with strong fundamentals, reasonable valuations and margin improvement opportunities.
Citi recommends overweight jobs in sectors such as healthcare, communications services and energy.
Healthcare has moved into the overweight market, with pharma and biotech leading the charge due to “right-sized” valuations and fundamentals that are closer to turning a corner.
Telecom services remain a strong option, supported by strong growth engines in the media and entertainment sector and attractive valuations in the telecom space.
Analysts are also defending IT semiconductors, pointing to the sector's implied growth potential and continued margin expansion.
Conversely, the Consumer Discretionary rating was downgraded to Underweight.
“Expectations appear to be stretched against consensus estimates,” Citi points out.
Citi said banks still prefer cyclical overweight, benefiting from improved deposit growth and loan repricing trends.
Energy is described as a “contrarian call to overweight”, with the potential for a rerating as fiscal stimulus and infrastructure investments gain momentum.
In defensive tactics, the Food and Beverage sector was upgraded to Overweight, as the fundamental outlook looks strong, “while the industry group is trading near oversold levels.”
With potential tariff risks and geopolitical uncertainties looming, Citi is urging investors to align sector views with stock selection. It is overweight to three of the “Magnificent 7” stocks, Alphabet (NASDAQ:), Meta (NASDAQ:), and Nvidia (NASDAQ:), market-weight two, Microsoft (NASDAQ:) and Amazon (NASDAQ:), and underweight Apple (NASDAQ:). NASDAQ:) and Tesla (NASDAQ:).
