Citigroup’s Bullish Call Signals New Momentum for Out-of-Home Advertising

Lamar Advertising Co (LAMR)—one of America’s largest and most established outdoor advertising real estate investment trusts (REITs)—has just received a pivotal vote of confidence. On May 29, 2025, Citigroup upgraded Lamar from “Neutral” to “Buy,” lifting its price target to $135 from an unspecified previous level. With shares trading at $120.02 in pre-market activity, this upgrade translates into a potential upside of roughly 12.5%. For investors seeking stable income and defensive growth in an uncertain macro environment, Citigroup’s move could be a signal that the market is under-appreciating Lamar’s durability and long-term earnings power.

Analyst upgrades—especially from globally recognized firms—are critical signals for investors. They integrate new data, sector trends, and management insights to recalibrate expectations, often acting as catalysts for institutional buying and price momentum. Citigroup’s upgrade is especially notable considering its deep sector coverage and influence among portfolio managers.

Key Takeaways:

• Potential Upside: Citigroup’s $135 price target implies a 12.5% return from current levels.

• Stock Price Action: LAMR has exhibited mild price appreciation in early trading, despite recent price weakness.

• Recent News: Positive developments include reaffirmed 2025 growth guidance, a dividend payout, an increased stock repurchase program, and management confidence in bookings.

• Sector Context: Lamar operates in a capital-intensive, high-barrier outdoor advertising sector with limited new supply and stable, recurring revenue streams.

• Technical Dynamics: The stock’s RSI sits at 60.4 (a bullish range), and recent volume is notably low, hinting at potential volatility ahead.

Citigroup Upgrade: Context and Weight

Analyst Confidence and Firm Background

Citigroup is a global leader in financial services, renowned for its robust research coverage and influence in REITs and media. Its analyst teams are well-regarded for deep sector expertise, making their upgrades significant market signals—especially when they shift from "Neutral" to "Buy." Such a move suggests a high degree of conviction, likely underpinned by new data, improved outlooks on sector fundamentals, and access to company management.

Citigroup’s $135 target reflects its view that Lamar’s cash flow growth and defensive characteristics are undervalued by the market. The upgrade aligns with recent management commentary and data indicating resilient demand for out-of-home advertising, even as digital ad spending remains volatile.

Lamar’s Business Model: Durable, Recurring, and Moat-Driven

Lamar Advertising owns and operates one of North America’s largest portfolios of billboards and digital displays, generating predictable, recurring revenue through long-term contracts with local and national advertisers. As a REIT, Lamar distributes a significant portion of its earnings as dividends, making it a staple for income-focused investors. The company’s competitive moat is reinforced by:

• Scarcity of New Supply: Municipalities heavily restrict new billboard construction, protecting incumbents.

• Local Market Leadership: Deep relationships and infrastructure in hundreds of mid-sized U.S. markets.

• Digital Transition: Ongoing conversion of static boards to digital, enabling dynamic pricing and higher yields.

Financial Performance and Recent Developments

Key Financial Metrics

• 2025 AFFO/share growth guidance: Reaffirmed at 4%, with management signaling the underlying growth rate could approach 6%+ as comparables normalize.

• Recent Dividend Action: Lamar announced a new quarterly dividend payout and an increase in its stock repurchase program—both confidence-boosting moves for shareholders (Zacks).

• Balance Sheet: Stable, with a conservative debt structure typical of investment-grade REITs.

Price & Technicals

• Current Price: $120.02 (pre-market, May 29)

• 52-week Range: $99.84–$139.88

• Recent RSI: 60.4, indicating positive momentum but not yet overbought.

• Average Daily Volatility: 2.63%, suggesting moderate risk for short-term traders.

LAMR’s share price has dipped from last October’s highs, but the recent stabilization and upward drift—paired with Citigroup’s call—may mark an inflection point.

Recent News and Market Sentiment

• Seeking Alpha highlights management’s confidence in growth, noting that “recent stock price weakness presents a buying opportunity, as underlying growth is likely closer to 6%+ once tough comps normalize.” (Source)

• Other coverage focuses on Lamar’s simplicity and resilience: “There’s real, lasting wealth in boring, stable businesses. … That’s why I focus on dividend-paying companies with simple models, steady growth, and strong balance sheets.” (Source)

Analyzing Upside: What Citigroup’s New Target Means for Investors

Calculated Upside

At $120.02, Citigroup’s $135 target suggests a potential upside of 12.5%. This is notable against a backdrop of defensive sector positioning and a business model that historically weathers downturns. For institutional allocators and yield-focused retail investors, this could signal a window for entry before broader market recognition.

Dividend and Buyback Leverage

LAMR’s expanded share repurchase plan and reliable dividend provide additional levers for total return. In an environment where bond yields are plateauing and equity risk premiums remain attractive, Lamar’s payout could act as a floor for downside risk.

Technicals and Sentiment: Volume, Volatility, and Market Dynamics

• Volume: Trading volumes are at year-to-date lows, suggesting that new institutional buying could drive sharp moves.

• Volatility: 2.63% daily volatility is moderate but may expand if Citigroup’s upgrade attracts further attention.

• RSI: At 60.4, LAMR is trending positive but not yet in “overbought” territory, supporting the thesis for near-term upside.

Risks and Opportunities

Risks

• Macroeconomic Headwinds: Advertising budgets are cyclical and could tighten if the economy slows.

• Digital Competition: While Lamar is digitizing its network, pure-play digital ad platforms remain a secular threat.

• Interest Rates: As a REIT, higher rates could pressure dividend yields and cap rates.

Opportunities

• Supply Constraints: Scarcity of new billboards enhances pricing power.

• Local Market Penetration: Depth in mid-sized markets offers resilience versus urban-focused peers.

• Potential for Accretive Acquisitions: With a healthy balance sheet, Lamar can opportunistically expand its footprint.

Expert Views: Management and Analyst Sentiment

“LAMR’s 2025 AFFO/share growth guidance of 4% is intact despite macro headwinds, with management reaffirming confidence and strong contract bookings. Recent stock price weakness presents a buying opportunity, as underlying growth is likely closer to 6%+ once tough comps normalize.”
— Seeking Alpha, May 27, 2025

Conclusion: Why This Upgrade Matters Now

Citigroup’s upgrade of Lamar Advertising represents a significant recalibration of institutional expectations, underpinned by resilient fundamentals, a shareholder-friendly capital return program, and technical signals that point to near-term upside. With a double-digit return potential and a business insulated from new supply, Lamar stands out as a rare blend of yield, stability, and growth in today’s market.

For investors seeking reliable income with the prospect of capital appreciation, Citigroup’s conviction—and the underlying data—make Lamar a name to watch closely in the quarters ahead.