Image Source: PexelsWhat has Wall Street been buzzing about this week? Here are the top 5 buy calls and the top 5 sell calls made by Wall Street’s best analysts during the trading week of June 24-28, 2024. First, here are the top 5 buy calls of the week.
1. Apple Upgraded at Rosenblatt after Survey Says Privacy-Focused AI Could Resonate
Rosenblatt upgraded Apple (AAPL) to Buy from Neutral with a price target of $260, up from $196. Based on the firm’s recent U.S. survey, Rosenblatt says strong privacy is “by far the top feature consumers want in AI,” so it contends that the unique privacy focus of Apple Intelligence “could resonate” and argues for market share lift potential for Apple in AI.Apple’s approach also appears to “immunize it from cost pressures at hyperscalers,” while enabling the iPhone maker to benefit from their investments, the firm tells investors.
2. Tesla Initiated With a Buy at Stifel
Stifel initiated coverage of Tesla (TSLA) with a Buy rating and a $265 price target. The firm thinks the revamped Model 3 and upcoming Model Y refresh should bolster sales, followed by the commencement of its next-generation vehicle Model 2 production, leading it to believe Tesla is very well positioned to deliver robust multi-year growth in 2025-27 and beyond.The firm also believes the AI-based Full Self-Driving, or FSD, initiative has the potential to generate significant value through sales of FSD, possible licensing agreements, and as a critical driver of longer-term RoboTaxi initiatives.
3. Disney Initiated With a Buy at Goldman Sachs
Goldman Sachs initiated coverage of Disney (DIS) with a Buy rating and a price target of $125 as part of a broader research note on U.S. Media names.The U.S. media industry is in a state of transition given increasing content competition from streaming, social, and mega tech as well as technology disruptions in distribution, and the firm prefers U.S. media stocks with deep competitive moats that should provide better visibility into growth, the firm tells investors in a research note. Goldman views the company as a “high quality EPS compounder” that should deliver a 14% EPS CAGR.
4. Guggenheim Starts Rivian With a Buy ahead of Financial Inflection
Guggenheim initiated coverage of Rivian Automotive (RIVN) with a Buy rating and a price target of $18. The firm sees a “credible path” to breakeven gross margin in Q4, and believes an inflection in financials should support the stock in the near-term.The firm, which also believes that the market has routinely underestimated operating leverage for electric vehicle OEMs in the past, advises that investors should be buying Rivian ahead of what the firm expects will be a positive inflection in EBITDA in mid-2026. The firm, which calls the R2/R3 platform the “largest source of value” in its sum-of-the-parts analysis, believes a high-teens gross margin is the base case for the platform, and concludes an investment in the stock is “about underwriting the R2/R3, something we believe investors should be enthusiastic about.”
5. Block Assumed With a Buy at Goldman Sachs
Goldman Sachs keeps a Buy rating and a price target of $80 on Block (SQ) after a different analyst at the firm assumed coverage of the stock. The firm views Block as one of the leaders in small business payments and consumer fintech, “capitalizing on its long history of product-led innovation.”The shares have been range-bound for effectively six years, but Block has begun scaling free cash flow and valuation support, introducing a “Rule of 40” framework, Goldman tells investors in a research note.Now, here are the top 5 sell calls of the week.
1. Paramount Initiated With a Sell at Goldman Sachs
Goldman Sachs initiated coverage of Paramount (PARA) with a Sell rating and a $9.50 price target as part of a broader research note on U.S. Media names. The firm says that while it is encouraged by continued progression towards Paramount+ profitability and theatrical box office normalization, it does not anticipate that this progress can offset persistent secular headwinds in Paramount’s linear cable and broadcast network business
2. Aptiv Downgraded to Underweight from Neutral at Piper Sandler
Piper Sandler downgraded Aptiv (APTV) to Underweight from Neutral with a price target of $63, down from $78, after Rivian announced the establishment of a joint venture with Volkswagen (VWAGY). At first glance, the news may seem unrelated to Aptiv, but the rationale for the joint venture is a red flag for the Aptiv thesis, the firm tells investors in a research note.Piper thinks Rivian, Tesla, and various Chinese electric vehicle specialists have concluded that, in the 21st century, automakers must configure their own electrical architecture, design their own onboard computers, and write their own code. For systems this critical, it’s too slow and too costly to rely on companies like Aptiv, the firm contends. “Aptiv is still relevant, but the bull case seems unrealistic,” Piper adds.
3. Centuri Downgraded to Underperform from Neutral at BofA
BofA downgraded Centuri (CTRI) to Underperform from Neutral with a price target of $21, down from $26. The CEO exit adds uncertainty, the firm tells investors in a research note. BofA says that with further interruption in key leadership roles and no permanent successor, Centuri faces “intensified risk” of mixed execution. It believes the company’s margin improvement story is more at risk, and reduced estimates.
4. Susquehanna Downgrades Werner to Negative on Estimate Risk
Susquehanna downgraded Werner Enterprises (WERN) to Negative from Neutral with a price target of $27, down from $32. While Werner’s cyclical challenges during the truckload market’s two-year downturn are not unique, the company’s “less explicit” earnings guidance strategy leaves the sell-side consensus numbers “more cyclically stale” than that of peer Schneider National (SNDR), the firm tells investors in a research note.Susquehanna says that if it is right on the magnitude of earnings risk across truckload carriers, Werner shares will be a “relative underperformer at best until estimates reach more realistic levels.”
5. Clorox Initiated With an Underperform at Exane BNP Paribas
Exane BNP Paribas initiated coverage of Clorox (CLX) with an Underperform rating and a price target of $130. The company’s demand trends have been “stubbornly slow” to recover from last summer’s cyber-attack, the firm tells investors in a research note. Exane BNP Paribas also believes Clorox’s margin story will take time to play out while its outsized exposure to private label is concerning.More By This Author:Here Is What Wall Street Is Saying About Micron Ahead Of Earnings Wall Street’s Top 10 Stock Calls This Week – Saturday, June 22Pre-Market Movers – June 21, 2024
