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 December 19-23, 2022.
Top 5 Buy calls:
Rivian (RIVN) – Cantor Fitzgerald starts stock with an Overweight, $22 price target
On December 20, Cantor Fitzgerald analyst Andres Sheppard initiated coverage of Rivian Automotive with an Overweight rating and $22 price target. Rivian benefits from a differentiated product offering, a strong backing from Amazon (AMZN), and a proprietary charging network, but shares are down about 79% year-to-date, so this could be a good entry point, Sheppard tells investors in a research note.
Moderna (MRNA) – Jefferies upgrades stock to Buy, raises price target to $275
On December 19, Jefferies analyst Michael Yee upgraded Moderna to Buy from Hold with a price target of $275, up from $170. The shares can rebound in 2023 given the company’s pipeline opportunities, Yee tells investors in a research note. He believes Moderna is the "new shiny thing" in personalized cancer vaccine following the recent positive Phase 2 data. The analyst is also positive on Moderna’s upcoming Phase 3 data in respiratory syncytial virus, and data later in 2023 for its orphan disease franchise.
DLocal (DLO) – BofA resumes stock with a Buy after allegations formally refuted
On December 22, BofA analyst Jason Kupferberg resumed coverage of DLocal with a Buy rating and $18 price target after the company refuted key allegations that were made against it in a short report published on November 16 and also announced a $100M share buyback authorization and proposed share buy from "prominent shareholders," including General Atlantic. While he acknowledges some risks to the story, Kupferberg is now comfortable resuming coverage and adds that he believes the take rate allegations ignore important mix factors.
Enphase Energy (ENPH) – Northland upgrades stock to Outperform amid “virtuous solar cycle”
On December 19, Northland analyst Gus Richard upgraded Enphase Energy to Outperform from Market Perform with a $365 price target after the California Public Utility Commission, or CPUC, passed NEMS 3.0, which increases incentives for storage and reduces them for residential solar. The analyst, who estimates that roughly 8%-12% of Enphase’s revenue is from California, notes that Hawaii and California have the highest percentage of renewable energy and argues that electrification drives natural gas prices higher, which drives solar and storage adoption, which drives the electrification of appliances and the need for more electricity in what he calls the "virtuous solar cycle."
MKS Instruments (MKSI) – KeyBanc upgrades stock to Overweight with $100 price target
On December 20, KeyBanc analyst Steve Barger upgraded MKS Instruments to Overweight from Sector Weight with a $100 price target. The analyst believes the company’s competitive position should drive growth in semiconductor and advanced packaging. Once the industry works through the current downcycle, a resumption of the long-term secular trends toward rising semiconductor demand will emerge, Barger tells investors in a research note. He believes a higher reliance on advanced packaging techniques and continued buildout of fabs to support regionalization should drive growth for MKS.
Top 5 Sell calls:
AT&T (T) – MoffettNathanson downgrades stock to Underperform after “dramatic bounce”
On December 19, MoffettNathanson analyst Craig Moffett downgraded AT&T (T) to Underperform from Market Perform with an unchanged price target of $17. After "an unprecedented stretch of underperformance" for Verizon (VZ), he believes his prior Underperform recommendation "has likely run its course." Meanwhile, after "a dramatic bounce for AT&T," he thinks relative valuations are "now inverted" and that AT&T "once again looks overvalued."
Stitch Fix (SFIX)– JPMorgan downgrades stock to Underperform from Neutral
On December 20, JPMorgan analyst Cory Carpenter downgraded Stitch Fix to Underweight from Neutral without a price target. The insurance lead generation sector is the analyst’s favorite across small and mid-cap internet stocks for 2023. He believes 2023 has the potential to be another tough year for Stitch Fix as the macroeconomic environment potentially brings greater headwinds to apparel spend.
Roblox (RBLX) – Wolfe Research downgrades the stock to Underperform with $24 price target
On December 21, Wolfe Research analyst Gal Munda downgraded Roblox to Underperform from Peer Perform with a $24 price target. The company’s "disappointing" November metrics potentially provide concern in company execution, Munda tells investors in a research note. The analyst believes consensus estimates for bookings growth over the near-to-medium term are high, and that it is too early to model the potential contribution from Roblox’s advertising opportunity as "many questions remain in terms of how the mechanics of advertisements can seamlessly work in the virtual platform." On the back of weak November metrics that seemed to have been contrary to management expectations, the dynamic among the investor base "will shift and leaves room for downside from current levels," writes Munda.
Yelp (YELP) – JPMorgan downgrades stock to Underperform, lowers price target to $23
On December 20, JPMorgan analyst Cory Carpenter downgraded Yelp to Underweight from Neutral with a price target of $23, down from $34. The insurance lead generation sector is the analyst’s favorite across small and mid-cap internet stocks for 2023. He downgraded Ziff Davis to Neutral and Yelp to Underweight citing a cautious view of online advertising. Trends in online advertising are unlikely to improve at least through the first half of 2023, Carpenter tells investors in a research note.
Palantir (PLTR) – Wolfe sees Palantir short making money, downgrades to Underperform
On December 21, Wolfe Research analyst Alex Zukin downgraded Palantir to Underperform from Peer Perform with a $4.50 price target. The company’s sales growth has decelerated by 30 points while operating margins have contracted from the mid-30% range to the mid-teens over the past few years with free cash flow on the same trajectory, Zukin tells investors in a research note. The "lumpiness and unpredictability" of both existing government contracts as well as potential awards "make it difficult to model and have confidence in the business," he adds. Further, Palantir’s commercial business has gone from a mid-20% grower to low double digits as the current product offering is expensive, requires customization, and the general go to market motion is "sub-par," based on channel checks, contends Zukin. His estimates are below Street expectations and he sees the opportunity to "make money on the short side." Zukin models for Palantir total revenue decelerating further, along with continued margin degradation in fiscal 2023 as the company continues to invest.
Published first on TheFly
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