Buy/Sell: Wall Street’s top 10 stock calls this week

What 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 week of February 26 – March 1.
 
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Top 5 Buy Calls:

1. Macquarie upgrades Snowflake on “temporary disconnect” post earnings

Macquarie upgraded Snowflake (SNOW) to Outperform from Neutral with a price target of $205, up from $182. The stock’s 20% selloff in the wake of CEO Frank Slootman’s resignation “is the entry point we awaited,” the firm tells investors in a research note. Mcquarie says the company has “cleared the decks” with its lower guidance while its strong product and sales origination mitigate C-suite uncertainty. It views the post-earnings selloff as a “temporary disconnect” between Snowflake’s solid fundamentals, conservative guidance, and “headline shockers.” This provides an attractive entry point into Snowflake, contends the firm.

2. Domino’s Pizza upgraded to Buy at Argus on further growth prospects

Argus upgraded Domino’s Pizza (DPZ) to Buy from Hold with a $530 price target. The firm is positive on the company’s economies of scale, early entry into the pizza delivery business and prospects for growth in international and domestic markets. Argus also cites Domino’s Pizza’s above-average margins, history of positive earnings surprises, and plans to open new stores over the next several years, raising its full year 2024 EPS view to $16.50 from $15.00 and setting a full year 2025 target of $18.00 per share.

3. BofA double upgrades Okta to Buy ahead of year of “beat & raise”

BofA double upgraded Okta (OKTA) to Buy from Underperform with a price target of $135, up from $64, citing strong Q4 results and the potential the firm sees for outperformance throughout 2025. Prior concerns around new customer growth, saturation among the existing customer base, and ongoing execution issues had previously kept the firm at Underperform, but BofA believes these headwinds have lessened and views 2025 guidance as “overly conservative,” which could drive upwards estimate revisions throughout the year and make 2025 likely to be a year of “beat & raise.”

4. Teladoc initiated with an Overweight at Cantor Fitzgerald

Cantor Fitzgerald initiated coverage of Teladoc (TDOC) with an Overweight rating and $22 price target. The firm believes current valuations do not appreciate the company’s unique positioning among peers as having high free cash flow yield, margin expansion, and multiple drivers of further top-line growth. Cantor has incremental confidence in Teladoc hitting long-term growth expectations, and finds the savings assumptions to be reasonable and the moving pieces to be well underway.

5. Dell Technologies initiated with a Buy at Loop Capital

Loop Capital initiated coverage of Dell Technologies (DELL) with a Buy rating and $125 price target. The firm sees material upside to Street estimates through 2026 and believes Dell has an opportunity “to alter the narrative around the stock such that a material valuation re-rating can occur.” The company is at the “very front end of at least two material catalysts” that provide upside to Street earnings estimates: gen artificial intelligence servers and a PC refresh cycle, Loop tells investors in a research note.

Top 5 Sell Calls:

1. Roku downgraded to Underweight at Wells Fargo

Wells Fargo downgraded Roku (ROKU) to Underweight from Equal Weight with a price target of $51, down from $77. The firm thinks Walmart’s (WMT) acquisition of Vizio (VZIO) creates “substantial risk” for Roku. The deal also sets a new connected TV valuation that is well below Roku’s current multiple, Wellstells investors in a research note. The firm cites the shifting competitive landscape for the downgrade.

2. Moderna downgraded to Reduce at HSBC

HSBC downgraded Moderna (MRNA) to Reduce from Hold with a price target of $86, up from $75. Moderna’s outlook for 2024 is underpinned by prospects for its COVID-19 vaccine revenue and RSV launch, the firm tells investors in a research note. However, HSBC is “skeptical” of the company’s two Phase 3 data readouts for its personalized cancer vaccine program in the medium term, noting RSV vaccine efficacy concerns. Despite the pipeline de-risking, the recent RSV vaccine data update indicates further risk to near-term growth, contends the firm.

3. Redfin downgraded to Underperform at Gordon Haskett

Gordon Haskett downgraded Redfin (RDFN) to Underperform from Hold with a $5.50 price target. The firm sees risks as significantly greater than the reward given risk of legal challenges proving detrimental to Redfin’s brokerage business and capital concerns that it views as likely to persist into 2027. Gordon also calls near-term profitability “a show-me story” given its view that “EBITDA (or lack thereof) is low quality.”

4. Smartsheet initiated with an Underperform at BofA

BofA initiated coverage of Smartsheet (SMAR) with an Underperform rating and $45 price target. Competitive intensity is increasing in Smartsheet’s corre enterprise market and the firm sees less room for revenue acceleration than it does at peers, the firm tells investors. BofA is bullish on the setup for collaborative work management software entering 2024, but prefers to have exposure through Asana (ASAN) and Monday.com (MNDY).

5. Enfusion downgraded to Sell at Goldman Sachs

Goldman Sachs downgraded Enfusion (ENFN) to Sell from Neutral with a price target of $8, down from $9, implying 14% downside. The firm expects the stock to be range bound in 2024. Street estimates reflect 10 points of acceleration in revenue over the next 12 months while Goldman is modeling three points, and the firm is 5% below the Street on revenue for 2025. Goldman’s industry conversations suggest the outlook for hedge funds is stable, rather than improving or deteriorating. Against this backdrop, Enfusion’s re-acceleration will need to be driven by company-specific improvements, such as faster market share gains, contends the firm. It believes it will likely take longer for Enfusion to deliver on these company specific drivers.