Many Wall Street investors keep a close eye on the opinions of major brokerages, such as Citigroup (NYSE:C). Therefore, today we’ll explore three promising growth stocks that have recently received a vote of confidence by means of increases in Citi price targets. During a given earnings season, robust financial metrics and upbeat guidance are usually the reasons behind such favorable moves by analysts.
Upgrades from investment firms can potentially act as a significant catalyst, boosting investor confidence and driving up share prices. A positive analyst report can signal a turning point for a company, highlighting improved financials, promising growth prospects or undervalued potential of its offerings. As a result, investors can position themselves to potentially benefit from their durable competitive advantages.
However, investors should maintain a realistic and cautious outlook, as the recent pullback in growth shares reminds us how fast the tide can turn on Wall Street. Interest rates may remain higher for longer, exerting downward pressure on equity valuations. As these growth stocks typically command premium valuations, investors should always do due diligence and exercise caution. With that information, here are three growth stocks enjoying hikes in Citi price targets.
Boston Scientific (BSX)
Source: shutterstock.com/Anastasia Zagoruyko
Today’s first stock benefitting from increases in Citi price targets is the leading medical device business, Boston Scientific (NYSE:BSX). The company offers a diverse portfolio of cardiovascular, rhythm management and endoscopy solutions in the rapidly growing MedTech space.
BSX shares hit an all-time high after the medical device maker reported robust first-quarter fiscal 2024 results on April 24. Revenue grew 14% year-over-year (YOY) to $3.9 billion. Adjusted earnings per share (EPS) came in at 56 cents, compared to 47 cents a year ago. The company surpassed expectations for every business segment and raised the full-year outlook to a level above consensus.
The impressive performance was driven primarily by the successful U.S. launch of the Farapulse PFA System for treating atrial fibrillation, as well as strength across its Interventional Cardiology and Peripheral Interventions portfolios. In January, the company received FDA approval for the Farapulse PFA system, leading to an immediate nationwide rollout. With an aging global population and rising prevalence of chronic diseases, the demand for minimally invasive medical devices is expected to continue growing, boding well for Boston Scientific’s future prospects.
Year-to-date (YTD), BSX stock has delivered 25%. At present, shares are changing hands at around 31 times forward earnings and 7 times trailing sales. Despite such lofty valuation levels, not just Citi but Wall Street overall remains positive on BSX stock, giving it an upside potential of around 14%.
Lam Research (LRCX)
Next on our list of growth stocks that earned Citi’s bullish outlook is Lam Research (NASDAQ:LRCX). The company is known for its wafer fabrication equipment for the semiconductor industry. With its cutting-edge technology and strong market position, Lam Research is well-positioned to benefit from the increasing demand for advanced chips driven by artificial intelligence (AI), cloud computing and 5G.
The semiconductor company recently delivered strong first-quarter fiscal 2024 metrics. While revenue declined 2% YOY to $3.79 billion, Lam Research remained highly profitable with its 30% adjusted operating margin. Adjusted EPS came in at $7.79.
The company’s solid performance was driven by the robust demand from its customers investing in capacity expansions to meet the appetite for more powerful chips. Going forward, capacity increases for high-bandwidth memory chips and multi-year foundry investments could mean further demand for Lam’s equipment.
So far in 2024, LRCX stock has gained 15%. The shares currently trade at a forward P/E ratio of 27x and a trailing price-to-sales ratio of 8x, suggesting a relatively premium valuation. Meanwhile, analysts’ price targets imply an average upside potential of 11% from current levels.
Vertiv Holdings (VRT)
Source: Pavel Kapysh / Shutterstock.com
Finally, we discuss why Vertiv Holdings (NYSE:VRT) is one of the stocks enjoying a Citi price target hike. The company provides digital infrastructure solutions for data centers and communication networks. Vertiv has been among the biggest AI beneficiaries over the past year, thanks to the growing demand for data center capacity. In fact, the global data center market is expected to grow at a compounded annual growth rate of 12% through 2030, a metric that bodes for Vertiv and its peers.
Vertiv reported solid first-quarter fiscal 2024 earnings on April 24. Revenue increased 8% YOY to $1.64 billion on the back of strong orders. Operating profit jumped 42% YOY, while non-GAAP EPS of 43 cents was up 79% YOY. During the first quarter of 2024, Vertiv bought back $600 million of stock.
The company’s impressive performance underscores the robust demand for its solutions as enterprises continue to upgrade their data center infrastructure. The firm ended the first quarter with a record-high $6.3 billion backlog. Organic orders jumped 60% YOY, benefiting from AI deployments that include liquid cooling technologies.
Since January, VRT stock has gained 94%. Given its strong growth trajectory, VRT trades at a lofty valuation of 39 times forward earnings and 5 times trailing sales. Finally, Wall Street’s 12-month price target implies an upside potential of around 6% from current levels.
On the date of publication, Tezcan Gecgil did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
