An aerial view of Paradise, California off of Clark Road on Nov. 15, 2018. The Camp Fire has burned more than 7,000 structures in Paradise.

"Public comments by the Governor and recent conversations with teams in Sacramento suggest that legislation to limit future wildfire risk could be passed in 60-90 days," Mehta wrote. "We rate the stock a buy as we believe that it is pricing in larger dollar liabilities than what PG&E will likely need to bear."

Citi upgraded the stock to a buy rating based on those deliberations, which could result in reduced wildfire liabilities for California utilities in the future, analyst Praful Mehta said. Shares rallied 14.6 percent Tuesday to close at $17.74. The bank's $33 price target is more than double the stock's closing price Friday.

Investors should buy shares of embattled utility PG&E as California lawmakers work to broker a deal with the state's electric and gas providers, Citigroup told clients Tuesday.

Gov. Gavin Newsom said last week the Golden State has given its team of bankruptcy attorneys and financial specialists 60 days to craft a plan to both keep the lights on and grant justice to those impacted by the historic wildfires. The most recent natural disaster — the fast-moving 2018 Camp Fire that killed at least 86 people and destroyed about 14,000 homes — was the state's deadliest.

Though responsibility for the Camp Fire has yet to be determined, state investigators cleared the utility company of liability in the October 2017 Tubbs Fire, the largest wildfire that year. While a small victory for the company, that finding comes after state investigators determined that PG&E's equipment was liable in at least 17 major wildfires in 2017.

Despite PG&E's liability for any fires in 2017 or 2018, Citi believes California's legislature may move to curb potential losses for its utility companies to help ensure consistent service to the state's residents.

"With path to legislation limiting future wildfire liabilities getting clearer, current price offers a great entry opportunity with upcoming catalyst," Mehta said.

California's biggest utility filed for Chapter 11 bankruptcy protection last month, citing at least $30 billion or more in potential liability from fires in 2017 and 2018. While such financial troubles have sent PG&E shares down more than 60 percent over the past 12 months, some investors are buying the beat-up equity.

Longtime investors including such as Seth Klarman's $30 billion hedge fund The Baupost Group and David Tepper's $14 billion Appaloosa Management have build sizable and complex stakes in the California utility. While Klarman has spoken to multiple insurance companies about buying their claims against PG&E, Appaloosa actually increased its PCG holdings in the fourth quarter despite the sell-off.

Such investors may be betting on a lighter-than-expected penalty for PG&E or find the security cheap following the months of declining prices.