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 Bu-y calls and the top 5 Sell calls made by Wall Street’s best analysts during the week of June 3-7.
 
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Top 5 Buy Calls:

1. HSBC upgrades Lululemon to Buy on “quite compelling” story

HSBC upgraded Lululemon (LULU) to Buy from Hold with a $425 price target following the Q1 earnings report. The company’s fiscal 2024 guidance is broadly unchanged, while the recent stock selloff implied the market may have been bracing for some downward revision, the firm tells investors in a research note. HSBC says Lululemon’s “superior margin profile” and product launch pipeline make for a “quite compelling” equity story. The shares have been “overly punished” despite “limited” earnings estimate revisions, contends the firm.

2. eBay resumed with Buy at Citi

Citi upgraded eBay (EBAY) to Buy from Neutral with a $64 price target after resuming coverage following a period of rating suspension. The firm sees an improved growth outlook and expects a return to margin expansion as well as upside to earnings estimates from share buybacks post the Adevinta sale. It believes the stock at current levels offers an attractive risk/reward profile. The shares offer an attractive entry point with eBay still trading below historical averages despite an improving outlook, Citi tells investors in a research note.

3. Gordon Haskett upgrades Instacart on selloff, positive order data

Gordon Haskett upgraded Instacart (CART) to Buy from Hold with a price target of $45, up from $37. With the Instacart down 20% since Instacart reported earnings and flat relative to the $30 initial public offering price set back in September, “now is an opportune entry point to buy the shares,” the firm tells investors in a research note. Gordon Haskett thinks the combination of the shares declining significantly more than peers and the broader market since Q1 earnings despite “solid upward revisions” to 2024 and 2025 EBITDA estimates, and its data science work pointing to the company’s Q2 orders pacing ahead of consensus, creates a “favorable risk/reward dynamic that warrants taking advantage of.” The firm is also encouraged to see Instacart’s digital engagement growth continue to outpace grocer foot and web traffic.

4. Flutter Entertainment initiated with an Outperform at Oppenheimer

Oppenheimer initiated coverage of Flutter Entertainment (FLUT) with an Outperform rating and $240 price target. The firm expects FanDuel to maintain leading U.S. market share and believes Flutter’s higher unit economics make it best positioned to absorb more U.S. states potentially increasing online gaming taxes. Oppenheimer adds that it sees any further tax hikes accelerating FanDuel and DraftKings’ (DKNG) “emerging duopoly” and eventually equating to higher advertising leverage.

5. Best Buy upgraded to Buy from Sell at Citi

Citi double upgraded Best Buy (BBY) to Buy from Sell with a price target of $100, up from $67. The firm believes the company’s catalyst path looks positive from here with upside potential to both earnings and valuation based on tech replacement cycles underway, new artificial intelligence innovation providing incremental demand, and margin execution remaining solid. Last week’s Q1 earnings reported proved Best Buy’s gross margin execution remains best-in- class with company specific drivers able to offset external pressures like higher promotional activity, Citi tells investors in a research note. The firm says the earnings print was a “thesis changer.”

Top 5 Sell Calls:

1. Exane starts Target with Underperform on “tepid” spending, competition

Exane BNP Paribas initiated coverage of Target (TGT) with an Underperform rating and $116 price target. The firm expects muted sales growth for Target given “tepid” consumer discretionary spending, competitive pressures from Walmart and Amazon, and “increased encroachment” from Temu. In addition, Exane believes Target’s self-help initiatives are entering the late stages. It sees Target falling short of its margin targets and stepping up investment.

2. Goldman downgrades Couchbase to Sell on competition, valuation

Goldman Sachs downgraded Couchbase (BASE) to Sell from Neutral with a price target of $18, down from $30. The firm sees an increasingly competitive landscape “with a seemingly elevated valuation” for Couchbase. Operating within a space that has seen success largely centered around the hyperscalers and MongoDB (MDB), it will be difficult for Couchbase to gain meaningful traction against these “well-resourced and highly recognized players,” Goldman tells investors in a research note. The firm believes the company needs notable investments to increase general awareness and knowledge around Capella. The stock’s risk/reward “skews unfavorable given the aforementioned points coupled with weakening data points from off-cycle prints,” contends Goldman.

3. Medifast downgraded to Underperform at DA Davidson on lower EPS estimates

DA Davidson downgraded Medifast (MED) to Underperform from Neutral with a price target of $17.50, down from $25. After meeting with Medifast, the firm pushed out its sequential flattening of revenue to Q1 of 2025, which lowered its 2025 sales forecast to down 5% from up 2% year-over-year and its EPS view by 29%. The stock is down 64% year-to-date, but DA Davidson thinks it could drift lower, noting that ads for the GLP-1 offering begin in July, which is later than the firm’s June expectation, and that the company will not talk about whether the ads drove an increase in new customers until November.

4. Relmada Therapeutics downgraded to Sell at Goldman Sachs

Goldman Sachs downgraded Relmada Therapeutics (RLMD) to Sell from Neutral with a price target of $2, down from $3, ahead of Phase 3 RELIANCE II data in adjunctive major depressive disorder. The firm sees increased risk associated with the date expected in the second half of 2025, noting potential impact from the same “trial execution missteps” that led to the failure of the two prior Phase 3 RELIANCE I and RELIANCE III trials in which “implausible results” were observed and potential underpowering of the study. Further, recent key opinion leader conversations point to continued hesitation to prescribe REL-1017, even if approved, Goldman tells investors in a research note.

5. Cantor starts Xometry with Underweight on limited growth potential

Cantor Fitzgerald initiated coverage of Xometry (XMTR) with an Underweight rating and $13 price target. The company’s asset-light, marketplace model can service mostly prototyping orders and is unable to support the parts’ qualification, transparency, and tracking needed for serial production of end-use parts, the firm tells investors in a research note. Cantor says that given the long-term shift to production applications and market saturation in prototyping, it views Xometry’s growth potential as limited. The company’s lower revenue per customer reflects prototyping orders and a customer cohort analysis shows very high initial interest that quickly declines, reflecting one-off prototyping work, contends the firm.