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

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 6-10.
 
Find all top-rated stocks by the best-rated analysts on TipRanks.

Top 5 Buy Calls:

American Express (AXP) – Morgan Stanley upgrades to Buy, names new top pick in consumer finance

On February 8, Morgan Stanley upgraded American Express to Overweight from Equal Weight with an $186 price target. The firm names the stock the firm’s new top pick in consumer finance as it tilts its stock picks toward higher credit quality, sustainable revenue growth, and positive operating leverage. American Express has a lower risk credit skew with higher FICO card members, and its credit losses are hitting pre-COVID levels only by 2024 while all other card peers will "overshoot on deterioration," Morgan Stanley says.

Spotify (SPOT) – Stock receives two upgrades to Overweight this week

On February 6, Atlantic Equities upgraded Spotify Technology to Overweight from Neutral with a $160 price target. The firm believes investors "will be heartened" to see the company’s non-music initiatives finally drive margin expansion. In addition, industry Q4 results show that the advertising market has now bottomed, which should drive improved confidence in estimates and multiple expansion for Spotify, Atlantic Equities says. The firm sees positive profit and advertising inflections for the company.

Meanwhile, Wells Fargo also upgraded Spotify Technology to Overweight from Equal Weight with a price target of $180, up from $121. The company’s operating expenditure is demonstrating leverage as income losses improve, and it should break-even in Q1 of 2024, the firm says. Wells sees Spotify’s margins and valuation as "upward bound with margin delivery rerating" the shares. Spotify is "coming off margin probation" and its price increase could boost its margins on music, the firm argues.

Foot Locker (FL) – BTIG starts coverage of stock with Buy, $55 target

On February 6, BTIG initiated coverage of Foot Locker with a Buy rating and $55 price target. The firm believes that the company’s new CEO Mary Dillon could be a "catalyst for change" and comes at a critical juncture as Foot Locker accelerates its assortment diversification efforts to offset reduced allocations from Nike (NKE). While Foot Locker faces some near-term bumpiness, the new leadership should make it a healthier, more nimble company with access to a broader customer base, the firm tells investors in a research note.

Delta Air Lines (DAL) & American Airlines (AAL) – More positive on carriers, Redburn upgrades duo to Buy

On February 8, Redburn upgraded Delta Air Lines and American Airlines to Buy from Neutral with fair values of $55 and $25, respectively. The firm is now more bullish on international airlines than domestic, becoming "more positive" on U.S. network carriers given their discounted valuations. Further, Redburn believes Delta’s network restoration into its core hubs this year will bring benefits, while American is at the "right end of the capex cycle."

Lockheed Martin (LMT) – Credit Suisse goes from Underperform to Outperform on the stock

On February 6, Credit Suisse double-upgraded Lockheed Martin to Outperform from Underperform with a price target of $510, up from $427, based on the firm’s updated sector outlook, improved confidence in Lockheed’s growth inflection and alignment in the firm’s out-year EBIT growth forecasts between Lockheed and Northrop Grumman (NOC), which Credit Suisse believes "argues for a relative multiple rerating." A weak book-bill was a primary driver of the firm’s prior Underperform rating, but the company has now reported three consecutive quarters with book-bill ratio greater than 1.0 times, the firm noted.

Top 5 Sell Calls:

Bank of America (BAC) – Keefe Bruyette downgrades "vulnerable" BofA to Underperform

On February 8, Keefe Bruyette downgraded Bank of America to Underperform from Market Perform with a price target of $33, down from $35. KBW’s estimates are 12% below consensus for 2024 and the shares are trading above its historical price-to-earnings multiple, the firm tells investors in a research note. Keefe views Bank of America shares as "vulnerable" following the 7% post-earnings rally and sees limited catalysts with the bank hitting "peak" revenues and net interest income. Bank of America’s current premium valuation to JPMorgan (JPM) is expensive for an environment that may face more revenue risk than a severe credit downturn, KBW adds.


DraftKings (DKNG) – Roth MKM cuts stock to Sell ahead of Super Bowl

On February 9, Roth MKM downgraded DraftKings to Sell from Neutral with a $15 price target as the firm expects first half of 2023 EBITDA losses greater than consensus and reduce investor conviction in the company’s profitability narrative. During Q4 results, Roth MKM expects management to signal disappointing Q1 2023 EBITDA as new state launches require more up-front investment than Street forecasts imply. The firm further expects Fanatics to launch OSB by Q1 2023 and reinvigorate concerns over an intensifying promotional environment.

Hain Celestial (HAIN) – Piper Sandler downgrades stock on estimate risks

On February 7, Piper Sandler downgraded Hain Celestial to Underweight from Neutral with a price target of $17, down from $19. The firm sees risks to the company’s fiscal Q4 implied guidance and says consensus expectations for fiscal 2024 earnings are still too high, perhaps by 10%-15% or more. Hain’s new CEO Wendy Davidson clearly indicated on the earnings call the need for higher brand spending, Piper says. The firm sees risks to 2024 estimates from higher spending.

Black Hills (BKH) – BofA and Mizuho cut stock to Underperform following Q4 results

On February 8, BofA downgraded Black Hills to Underperform from Neutral with a price target of $60, down from $79, following the company’s "disappointing" Q4 earnings report. Management "fully reset the outlook lower" and the "latest reboot is far worse than anticipated," BofA contends. Compounding the magnitude of the reset, Black Hills has rebased its growth outlook to the lower 2023 and reduced its expected growth rate to 4%-6% from 5%-7%, the firm said.

Meanwhile, Mizuho downgraded Black Hills to Underperform from Neutral with a price target of $60, down from $71. The firm cites the company’s "disappointing" Q4 earnings results, reduced guidance for 2023, and lower long-term growth of 4%-6% for the downgrade. With elevated natural gas price volatility, higher interest rates, and general inflationary pressures forecasted through 2024, Black Hills will only grow earnings 2% in 2024 and 4% in 2025, Mizuho adds.

Avista (AVA) – Mizuho says Sell on macroeconomics headwinds

On February 9, Mizuho downgraded Avista to Underperform from Neutral with a price target of $38, down from $45. The analyst is concerned about macroeconomic headwinds impacting SMID-cap utilities. Avista cited higher than expected natural gas price volatility in multiple regulatory filings and entered short-term credit agreements to cover liquidity needs to purchase physical commodities and to meet margin calls, the firm tells investors in a research note. The shares currently trade at a slight premium to the electric utility group, as the Street is overlooking the commodity and interest rate headwinds on Avista’s 2023 earnings, Mizuho adds.

Keywords: Wall Street, Buy, Sell, stocks, analyst, analyst calls, upgrades, downgrades, initiations, research

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