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 July 22-26, 2024. First, here are the top 5 buy calls of the week.
1. Shopify Resumed With an Overweight at KeyBanc
KeyBanc resumed coverage of Shopify (SHOP) with an Overweight rating and an $80 price target. Shopify’s “leading” e-commerce platform is well positioned to capitalize on the growing e-commerce expansion into the retail market through its “best-of-breed” cloud-based solution, the firm tells investors in a research note.KeyBanc sees a path for Shopify to achieve a $10 billion-plus run-rate in the mid-term, and the firm sees upside opportunity based on potential mobile commerce tailwinds, partnership production, offline momentum, and international expansion as the economic environment normalizes.
2. Spotify Upgraded to Buy from Neutral at Goldman Sachs
Goldman Sachs upgraded Spotify (SPOT) to Buy from Neutral with a price target of $425, up from $320, after the company reported “overall solid” Q2 results.The firm said that Spotify is the clear global audio platform leader, which it expects to translate into compounded user growth, rising engagement, and pricing power, and the company is continuing to show gross and operating margin momentum. Goldman added that, with compounding free cash flow, it sees potential for elevated shareholder returns via buybacks.
3. Estee Lauder Upgraded to Outperform at RBC Capital
RBC Capital upgraded Estee Lauder (EL) to Outperform from Sector Perform with a price target of $131. The firm believes the company’s earnings and investor sentiment have troughed, and that the stock’s risk-to-reward profile skews favorable.Estee’s sales will likely grow slower than RBC originally modeled, mainly due to lower assumed growth rates in China, but its margin opportunity is “very tangible and has additional room to grow,” the firm tells investors in a research note. Even with “conservative” sales growth and margin expansion estimates, RBC arrives at a fair value price target of $131.
4. Coinbase Upgraded to Buy at Citi
Citi upgraded Coinbase (COIN) to Buy from Neutral with a price target of $345, up from $260. The firm says shifts in the U.S. election landscape and the Supreme Court’s overturning of the long-standing Chevron precedent has changed its view on Coinbase’s regulatory risks. The Major Questions Doctrine likely increases judicial scrutiny of the SEC’s regulation by enforcement strategy, the analyst tells investors in a research note.While Coinbase shares are up 52% year-to-date, the opportunity from a more conducive regulatory environment is “too large to ignore,” contends Citi. It believes this could potentially unlock sidelined institutional capital. Coinbase could also benefit from a potential U.S. crypto catchup against relatively higher on-chain activity that has developed abroad, adds the firm.
5. Lockheed Martin Upgraded to Buy at TD Cowen and Deutsche Bank
TD Cowen upgraded Lockheed Martin (LMT) to Buy from Hold with a price target of $560, up from $480. The company’s strong Q2 and F-35 delivery restart give Lockheed enhanced visibility of 5% sales gains, 10-20 points of margin lift, and rising cash flow through 2026, the firm tells investors in a research note. Yet the stock has lagged year-to-date with a peer-low 20% net buy rating, contends TD Cowen.Deutsche Bank also upgraded Lockheed Martin to Buy from Hold with a price target of $600, up from $540. The company’s “strong” Q2 results point to an “attractive beat/raise opportunity” in the second half of 2024, the analyst tells investors. The firm believes this likely compounds into 2025 and 2026, with potential upside to EBIT in 2026 approaching the high-single-digit range. Deutsche thinks Lockheed shares can re-rate to reflect this upside opportunity.Next, here are the top 5 sell calls of the week.
1. Under Armour Downgraded to Underweight at Morgan Stanley
Morgan Stanley downgraded Under Armour (UAA) to Underweight from Equal Weight with a price target of $4, down from $8, as part of a broader research note on Branded Apparel and Footwear.The company’s customers’ next-12-months propensity to spend screened in-line with its major sportswear peers, but its brand momentum ranking was “notably worse” in popularity, loyalty, and change in the past 12 months’ spending, resulting in an aggregate ranking that was below its competitors, the firm tells investors in a research note. Morgan Stanley adds that it sees a potential for valuation de-rating for Under Armour, as challenged fundamentals and lack of near-term catalysts become more appreciated.
2. BWX Technologies Downgraded to Underweight at Barclays
Barclays downgraded BWX Technologies (BWXT) to Underweight from Equal Weight with a price target of $90, up from $75. The firm sees risk to BWX’s medium term mid-to-high-single digit EBITDA target, even with accelerating growth from medical/power, the analyst tells investors.BWX’s core Naval propulsion business has grown below Shipbuilding budgets. Additionally, Barclays sees continued pressure on aircraft carriers, which is the largest component of its Naval business, while also noting that the stock is trading at an “all-time high premium to peers.”
3. Sirius XM Downgraded to Sell at Citi
Citi downgraded Sirius XM (SIRI) to Sell from Neutral with a $2.80 price target. The firm believes the recent appreciation in Sirius XM shares may be a result of a short squeeze. In addition, Citi believes shares of Liberty SiriusXM (LSXMA) may be more indicative of the value of the pro forma SiriusXM entity. Given the “valuation dislocation,” the firm is downgrading shares of Sirius XM to Sell and maintains a Neutral rating on Liberty SiriusXM.
4. Schneider National Downgraded to Underperform at BofA
BofA downgraded Schneider National (SNDR) to Underperform from Neutral with an unchanged price target of $23. The downgrade is based on continued rate and demand weakness, as well as inflationary cost pressures, notes the analyst, who also points out that shares have run past the firm’s target valuation.
5. Texas Capital Downgraded to Sell at Citi
Citi downgraded Texas Capital (TCBI) to Sell from Neutral with an unchanged price target of $60. Despite the “soft” share price reaction following Texas Capital’s Q2 results, Citi continues to see downside from current levels as the earnings outlook over the next 12 months “looks rather uninspiring,” the firm tells investors in a research note.Citi says that while the core franchise has undergone a tremendous amount of change since 2020, in a lower interest rate environment, its 2025 Goal metrics are unachievable.More By This Author:Here’s What Wall St. Experts Are Saying About Tesla Ahead Of Earnings Here’s What Wall Street Experts Are Saying About These Media Names Ahead Of Results Here’s What Wall Street Experts Say About These Automakers Ahead Of Earnings
