Citi Research analysts have recently released their list of top buy-rated and sell-rated stocks within the information technology sector (NYSEARCA:XLK). Despite downgrading the technology hardware and equipment industry group to underweight, analysts maintained a market weight overall rating for the sector. However, Strategist Scott Chronert highlighted that semiconductors and the semiconductor equipment industry still have strong structural drivers such as artificial intelligence driving demand.
In terms of software and services, Chronert mentioned that they remain overweight with high sales and earnings trends. On the other hand, the technology hardware and equipment subsector has seen less significant fundamental growth drivers, with the market potentially overestimating an early earnings growth inflection.
The top buy-rated stocks ranked by estimated total return (ETR) include Dynatrace Inc. (DT) with an ETR of 48%, Apple Inc. (AAPL) with an ETR of 27%, Micron Technology Inc. (MU) with an ETR of 26%, VeriSign Inc. (VRSN) with an ETR of 25%, Coherent Corp. (COHR) with an ETR of 25%, Cognizant Technology Solutions Corp. (CTSH) with an ETR of 24%, and Pure Storage Inc. (PSTG) with an ETR of 24%.
Conversely, Citi’s sell-rated stocks include NXP Semiconductors NV (NXPI) with an ETR of -37%, Skyworks Solutions Inc. (SWKS) with an ETR of -19%, IPG Photonics Corp. (IPGP) with an ETR of -18%, and DXC Technology Co. (DXC) with an ETR of 0%.
