Citigroup's new target prices: which stocks have upside potential?
When it comes to investing, investors sometimes rely on the analysis of large financial institutions that conduct detailed research and provide target prices for stocks. One of these institutions is Citigroup, one of the largest financial players in the world. When Citigroup adjusts its target prices, investors pay attention because it can signal a potential rise or fall in the value of a stock in the market.
In this article, we'll take a look at three companies where Citigroup recently raised its target prices. We'll find out what led to these changes and what it may mean for investors.
Sweetgreen $SG+5.3%
The first name on the list is Sweetgreen, a company known for its healthy and fresh meals. Citigroup raised the target price on this stock to $32 from the original $30. However, given the current share price, which is just above $34, Citigroup considers Sweetgreen stock slightly overvalued.
Sweetgreen operates a chain of restaurants in a "fast casual" model that combines the speed and affordability of fast food with the quality of traditional restaurants. This business model has seen growth of 11.2% in 2023, significantly higher than other types of restaurants. Sweetgreen's growth has been substantial, with sales nearly tripling from the end of 2021 to the second quarter of 2024.
The target price increase may be the result of the company beating analysts' expectations for second-quarter sales and improving its outlook for the full year. The company is also successfully experimenting with robots for salad preparation, which has led to higher average order prices by 10%, which could contribute to margin expansion.
YETI $YETI+2.3%
YETI Holdings, Inc.
YETIAnother company on the list is YETI, known for its high-quality coolers and thermoses. Citigroup raised its target price for YETI to $50 from $47, which represents a potential upside of more than 20% at the current stock price.
YETI, while growing more slowly than Sweetgreen, has achieved 25% revenue growth since the end of 2021. Unlike Sweetgreen, however, YETI has been profitable for several years, posting a net profit of $188 million over the past twelve months.
Analysts have raised their target prices for YETI mainly because the company has beaten earnings per share estimates by more than 10%, raised its full-year net income growth guidance by 1.5%, and significantly increased gross margin, which has risen 360 basis points.
Expedia $EXPE+2.1%
Expedia Group, Inc.
EXPEThe last company on the list is Expedia, a well-known online vacation booking platform. Citigroup raised its target price for Expedia from $140 to $145. Considering the current share price, which is $130, this new target price suggests a potential upside of more than 10%.
Expedia was hit hard by the COVID-19 pandemic, with its annual revenue not returning to pre-pandemic levels until 2023. Despite beating earnings per share estimates by 11% and revenue by $30 million, the company issued a lower-than-expected full-year outlook. The company expects a "more challenging macroeconomic environment and a slowdown in travel demand" in the coming months.
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