Investing.com – Citi analysts have revealed their Q1 2025 equity plan, emphasizing a more balanced approach amid changing economic conditions and policy uncertainty.
Their “SIGN (Sector and Industry Group Navigator)” outlines key areas of focus for investors as the year progresses.
This strategy includes a combination of growth, cyclical, and defensive plays, adapting to the mixed characteristics of the economy.
Citi analysts warned that “Trump-related policy uncertainty during Q1” could increase market volatility.
They advise investors to prioritize sectors with strong fundamentals, reasonable valuations, and opportunities for margin improvement.
Citi recommends extreme positions in sectors such as Healthcare, Telecommunications Services, and Energy.
Healthcare moved to Overweight, with Pharmaceuticals and Biotechnology leading the charge due to “fair size” estimates and fundamentals near inflection.
Communications Services remains a strong option, supported by growing drivers in Media and Entertainment and an attractive forecast for Telecommunications.
Analysts also support Semiconductors within the Information Technology space, citing the sector's significant growth and continued margin expansion.
Conversely, Consumer Discretionary has been downgraded to a lower weight.
“Expectations appear to have increased compared to consensus estimates,” Citi said.
Citi said the banks remain popular in cyclical difficulties, benefiting from improved deposit growth and refinancing trends.
Energy is described as a “call against Supply,” with potential to scale back as fiscal stimulus and infrastructure investment gain momentum.
In defensive sports, Food, Beverage and weight improvement, and the basic view seems to be strong, “while the business team is selling near the upper levels.”
With potential tax risks and geopolitical uncertainty, Citi urges investors to balance sector views and stock picks. Overweight 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: ) and Tesla (NASDAQ: ).