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Karuna Therapeutics Inc . (NASDAQ:KRTX), DXC Technology Co (NYSE:DXC), and an energy company (not named) have been removed from the list. KRTX is no longer covered by Citi, while DXC was removed after a downgrade. The energy firm has been removed as a result of an acquisition.
Here’s which stocks are replacing them:
Etsy Inc (NASDAQ:ETSY): The biggest name being added is online marketplace Etsy. Citi said it had been intrigued by the company’s longer-term growth prospects, but its valuation has so far kept it on the sidelines. The firm said near-term macro headwinds from a pressured consumer have put pressure on the stock, with Q3 guidance falling short of implicit expectations. However, it added that risks are more balanced following the recent pullback and “should a soft landing materialize, there is strong upside here.”
Nov Inc (NYSE:NOV): The analyst stated there is a strong case for margin expansion and FCF generation moving forward for NOV, as “the pricing mix mechanically improves alongside turnover of lower margin contracts.” It added that the FCF generation “should enhance NOV’s ability to return cash.” Citi currently has an upside catalyst watch open on NOV.
Shoals Technologies Group Inc (NASDAQ:SHLS): Finally, the firm explained that SHLS’s “rapid top-line growth and healthy margins” caught its attention. “The stock has been swept up in the broader solar selloff as near-term macro headwinds slow growth in solar installations,” the analyst wrote. However, Citi sees it as an opportunity to add when “investors are overly focused on the quarterly growth progression, providing a margin of safety and upside should macro headwinds fade into next year.” The firm believes SHLS should be able to capture market share and build on its position as the “leading supplier of EBOS for solar.”
