Image Source: PixabayWhat 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 Oct. 14-18, 2024. First, here are the top 5 buy calls of the week.
1. Zoom Video Upgraded to Outperform at Wedbush as New Analyst Takes Over
Wedbush upgraded Zoom Video (ZM) to Outperform from Neutral with a price target of $85, up from $80, as the firm transferred coverage of multiple software names across the tech industry. The company is expecting to see a re-acceleration in growth at enterprise customers, while seeing its churn stabilize, says the firm, which expresses “confidence in the story going forward.”Zoom’s broad portfolio includes video, voice, and chat. Additionally, it is now also expanding into the contact center with a “strong installed base” of small-to-mid sized business, mid-market and enterprise customers, positioning the company for strong up-sell and cross-sell opportunities, Wedbush tells investors.
2. Universal Health Upgraded to Buy at TD Cowen
TD Cowen upgraded Universal Health (UHS) to Buy from Hold with a price target of $283, up from $220. The company’s EBITDA consensus estimates over the next three to 12 months may move 15%-20% higher, and potentially higher long-term as the acceleration of state directed payment expansion is more readily apparent, the firm tells investors in a research note.TD believes this tailwind carries both EBITDA upside and multiple expansion. It believes Universal Health’s state directed payment EBITDA upside is underappreciated by investors.
3. Cisco Upgraded to Buy at Citi
Citi upgraded Cisco (CSCO) to Buy from Neutral with a price target of $62, up from $52. The firm expects the company to benefit from an expanding artificial intelligence total addressable market and a narrowing valuation gap versus peers.While AI is currently a small piece of Cisco’s business, Citi sees the potential for a stronger contribution. The firm is now incrementally more constructive on the group and expects continued investor rotation out of semis and hardware into networking equipment.
4. Autodesk Initiated With an Overweight at Wells Fargo
Wells Fargo initiated coverage of Autodesk (ADSK) with an Overweight rating and a $340 price target. The firm has confidence the company’s recent model transitions will help “pave a cleaner path forward” for reaccelerating revenue growth and a return to 30% free cash flow margin.Autodesk has proven the design category de facto for decades, delivering double-digit revenue growth at scale, expanding its core foundation of strength into adjacencies, and transitioning the model to recurring revenue to build a more resilient base for the business, the firm tells investors in a research note.
5. Flutter Entertainment Upgraded to Overweight at Wells Fargo
Wells Fargo upgraded Flutter Entertainment (FLUT) to Overweight from Equal Weight with a price target of $295, up from $224, implying 34% upside. Last week’s selloff reflects a “unlikely/near-worst case” U.K. tax scenario and minimal offset, the firm tells investors in a research note.With confidence FanDuel will increase structural hold to 15% in fiscal 2027, Wells says one can arrive at Flutter’s targeted fiscal 2027 revenue targets on fairly conservative assumptions.
Flutter Entertainment Reinstated With a Buy Rating at BofA
BofA also reinstated coverage of Flutter Entertainment with a Buy rating and a Street-high $300 price target, and the firm added the stock to BofA’s “Europe 1” list of top ideas.The firm says the 35% upside potential implied by its price target is premised on FanDuel’s “unique positioning and vigorous market backdrop,” which leads it to put its estimates 18% ahead of 2027 consensus. The firm also cites “large value creative opportunities,” with Brazil being the last example and what it calls “mispriced growth potential.”Next, here are the top 5 sell calls of the week.
1. Etsy Downgraded to Sell at Goldman Sachs
Goldman Sachs downgraded Etsy (ETSY) to Sell from Neutral with a price target of $45, down from $70. The firm continues to see risk to Street estimates given low visibility on gross merchandise sales, the potential for Etsy’s share losses to persist over time, and the risk of margin compression in 2025 versus the Street expecting margin expansion.Etsy’s sales declines have persisted longer than expected, and visibility on a durable return to positive growth remains low, Goldman tells investors in a research note. The firm expects the Etsy Marketplace to continue to lose market share of overall global e-commerce sales in the years ahead.
2. Guggenheim Downgrades SolarEdge to Sell on Europe, Cash Challenges
Guggenheim downgraded SolarEdge (SEDG) to Sell from Neutral with a $10 price target. The company seems to have “no answer” for the continued aggressiveness of Chinese suppliers in European markets for residential inverters, the firm tells investors in a research note.Guggenheim believes a “fundamental reassessment” of SolarEdge’s product lineup in Europe is needed. Investors may be underestimating how quickly the attach rate in the market could rise next year as prices continue to decline and the remaining California NEM 2.0 backlog, which has much lower storage attach rates, is worked off, contends the firm. Guggenheim also believes SolarEdge will need to raise capital before September 2025.
3. Caterpillar Downgraded to Underweight at Morgan Stanley
Morgan Stanley downgraded Caterpillar (CAT) to Underweight from Equal Weight with a price target of $332, down from $349. The firm sees mounting risks of de-stocking and limited offsets from mega projects and manufacturing.When combined with the stock’s year-to-date performance and a mid-cycle multiple on peak earnings, Caterpillar faces rising earnings revision risk, Morgan Stanley tells investors in a research note. The firm says channel inventories in U.S. construction equipment may need to be de-stocked, leading to a potential downturn.
4. Fortinet Downgraded to Underperform at Mizuho
Mizuho downgraded Fortinet (FTNT) to Underperform from Neutral with an unchanged price target of $68. The firm’s recent channel checks on Fortinet were “very mixed,” with some enterprise-focused partners falling short of plan. It continues to hear of very limited adoption of Fortinet’s secure access service edge solutions.Mizuho believes the company’s Q3 billings and revenue may only be roughly in line, and it feels Fortinet’s growth rates will remain challenged for at least the near-term. The firm worries that consensus billings expectations for 2025 “will be tough to beat.”
5. AutoZone Downgraded to Sell from Buy at Goldman Sachs
Goldman Sachs double downgraded AutoZone (AZO) to Sell from Buy with a price target of $2,917, down from $3,205. The firm repositioned its stock ratings distribution to favor companies that are more exposed to discretionary goods. It sees the discretionary category as an area for stronger growth trends over the next 12 months as the interest rate environment eases.The double downgrade is based on the lower income consumer, to which AutoZone has significant exposure, likely remaining under pressure into 2025, Goldman tells investors in a research note. As cars become more affordable, the firm sees increased risk of a lower amount of repairs.More By This Author:Wall Street Split On Netflix Ahead Of Earnings What Wall Street Is Saying About Big Banks Ahead Of Earnings Another Trio Of Biotech IPOs Made Friday Debut
