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

Wall Street experts reveal the five stocks to buy, five stocks to sell 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 March 20-March 24.
 
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Top 5 Buy Calls:

1. Meta Platforms upgraded to Buy from Hold at Edward Jones

Edward Jones upgraded Meta Platforms (META) to Buy from Hold. The company is reducing expense expectations, which addresses concerns about heavy spending on its metaverse initiative, the firm tells investors in a research note. Edward Jones also thinks Meta’s advertising revenue could stabilize and return to modest growth by the end of 2023 as the online ad market starts to recover.

Morgan Stanley upgrades Meta Platforms to Overweight on "structural pivot"

Morgan Stanley also upgraded Meta Platforms to Overweight from Equal Weight with a price target of $250, up from $190, citing the company’s "structural pivot" to focusing on efficiency and return on invested capital, improving revenue and engagements trends, "surging" Reels monetization and "further revenue call options" in artificial intelligence, subscriptions, and click-to-message. The firm also sees the company as the "most durable mega cap" if the consumer weakens. The stock’s valuation still looks attractive, trading at a 33% discount to peers on a growth adjusted basis, Morgan Stanley adds.

KeyBanc upgrades Meta Platforms to Overweight as advertising market settles "on more stable footing"

Meanwhile, KeyBanc upgraded Meta Platforms to Overweight from Sector Weight with a $240 price target. The firm believes the advertising market is settling "on more stable footing," which shifts KeyBanc’s preference back towards Meta. With its latest reductions, Meta’s 2023 operating expense guidance has been reduced by 10%, the firm tells investors in a research note. When coupled with CPMs showing signs of improvement, KeyBanc believes the company’s operating margins should get to at least 31% by 2024. As a result, it projects Meta will report earnings per share of $10.57 and $13.39 for 2023 and 2024, respectively, 6% and 9% above consensus.

2. Spotify upgraded to Buy at Guggenheim on music industry growth potential

Guggenheim upgraded Spotify (SPOT) to Buy from Neutral with a price target of $155, up from $120, citing the view that the global music industry has the potential for "market-leading financial growth" over the next several years. Music is "intrinsically valuable to consumers" and with a decade-long period of largely promotional pricing ending for on-demand streaming music, the firm sees an attractive revenue growth runway for the industry that will exceed current consensus estimates.

3. Nike upgraded to Overweight from Equal Weight at Barclays

Barclays upgraded Nike (NKE) to Overweight from Equal Weight with a price target of $154, up from $110. The company’s "significant beat" in fiscal Q3 is evidence of broad-based brand strength in spite of a weakening consumer macro backdrop, the firm tells investors in a research note. Nike has now posted two consecutive quarters of constant currency growth in China with accelerating trends exiting February, Barclays says. The firm’s inventory model predicts a positive sales-to-inventory inflection in fiscal Q4.

4. Evercore ISI upgrades Foot Locker to Outperform, raises price target to $60

Evercore ISI upgraded Foot Locker (FL) to Outperform from In Line with a price target of $60, up from $32. After Mary Dillon first joined in October, the firm was "intrigued with her self-awareness of the existential challenges Foot Locker faces" and at the company’s investor day the firm thought she and her team articulated a "thoughtful, credible vision." That vision "leans into the things that Nike, adidas (ADDYY) and Under Armour (UAA) can’t do themselves as monobrands" and deepens Foot Locker’s unique moats as a retailer, the firm contends.

5. Coinbase upgraded to Buy from Hold at US Tiger

US Tigeri upgraded Coinbase (COIN) to Buy from Hold with a price target of $200, up from $65, acknowledging that it is making a "non-consensus call" with a Street-high price target implying 167% upside. The firm believes the crypto market "has started a new bull run" and says crypto prices are the main factor to consider when investing in Coinbase. It thinks a crypto bull market will drive "significant" revenue growth for the company. After revising up its estimates, US Tiger’s 2023 and 2024 revenue estimates are 26% and 50% above consensus, respectively. Bitcoin’s current market cap is roughly $500B, while the gold market cap is estimated at $12.6 trillion, or 23.2 times Bitcoin’s, suggesting significant upside for bitcoin in the long term, US Tiger contends.

Top 5 Sell Calls:

1. BioMarin initiated with an Underperform at Bernstein 

Bernstein initiated coverage of BioMarin (BMRN) with an Underperform rating and $81 price target. The firm believes Roctavian will be approved and drive some short-term performance of the stock, but says it will significantly underperform commercial expectations. After survey of 20 hemophilia specialists, Bernstein concludes the consensus estimate implication of 40% peak penetration in severe hemophilia A patients in the U.S. is "highly unlikely." It models peak penetration of 25%.

2. Bernstein bearish on Ionis Pharmaceuticals, initiates with an Underperform

Bernstein initiated coverage of Ionis Pharmaceuticals (IONS) with an Underperform rating and $31 price target. The company’s ASO technology appears to underperform RNAi on knockdown depth and/or dosing frequency, Bernstein tells investors in a research note. The firm says Ionis has experienced "quite a few setbacks over the years," and that this trend will continue "until we have strong evidence to the contrary."

3. AMC Entertainment resumed with a Sell, $1.60 price target at Citi

Citi resumed coverage of AMC Entertainment with a Sell rating and $1.60 price target. The firm suspects AMC may be able to reduce its leverage as the U.S. box office recovers and via equity issuance, but believes the common equity is overvalued at prevailing levels. AMC’s net leverage remained elevated in 2022, Citi tells investors in a research note.

4. Luminar downgraded to Sell from Neutral at Goldman Sachs 

Goldman Sachs downgraded Luminar (LAZR) to Sell from Neutral with a $5 price target. The firm downgraded the stock to reflect what it believes is margin risk and a premium valuation, with 35% downside to its price target. Goldman continues to see Luminar as one of a handful of leaders in the lidar industry, though it sees downside to the company’s margin outlook.

5. TD Cowen downgrades Coinbase to Underperform after notice from SEC

TD Cowen downgraded Coinbase (COIN) to Underperform from Market Perform with a $36 price target. The analyst sees "incremental risks" to the company’s operations from the SEC Wells Notice and crypto banking "crackdown." This will create an overhang on the shares and remove positive near-term catalysts, including Ethereum’s Shapella upgrade and a U.S. derivatives launch, the analyst tells investors in a research note. The firm says Coinbase’s adjusted EBITDA quality "remains low" given the heavy reliance on stock-based compensation.

Meanwhile, after Coinbase disclosed that it received a Wells notice from the SEC regarding "an unspecified portion" of its spot market, Coinbase Earn staking service, Coinbase Prime institutional investor platform, and Coinbase Wallet, Compass Point said the firm expects investors to view this as "a materially negative risk" and that it expects Coinbase to fight any enforcement action in court, which will likely take several years including any appeals. In the end, the firm does not expect any SEC enforcement action to present "an existential threat to Coinbase," and it ultimately expects Coinbase to prevail in court, preserving the vast majority, if not all, of its business, with the worst case scenario likely being a multi-hundred million dollar fine. The firm, which acknowledges the "headline risk" from the ongoing fight, keeps a Buy rating and $100 price target on Coinbase shares.

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