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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

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 May 15-19.
 
Find all top-rated stocks by the best-rated analysts on TipRanks.

Top 5 Buy Calls:

1. Loop Capital upgrades Meta to Buy on better revenue outlook 

Loop Capital upgraded Meta Platforms (META) to Buy from Hold with a price target of $320, up from $220. The firm view the company’s expense rationalization as more a one-time driver but has become increasingly positive on Meta’s revenue outlook. Three significant headwinds to revenue – Apple ad tracking changes, foreign exchange and transition to Reels – are all cycling through and set to become tailwinds, Loop Capital tells investors in a research note. The firm estimates these pressures had around a mid-teens percent headwind to revenue growth. In addition to acceleration from comp normalization, Meta should see strong product-driven enhancements with Advantage+ and monetization momentum on Reels, contends Loop. It believes earnings estimates "barring an intensified global recession."

2. Snap upgraded to Buy from Neutral at Arete

Arete upgraded Snap (SNAP) to Buy from Neutral with an unchanged price target of $12. At the recent NewFronts, Snap released a suite of new advertising products, including Spotlight Ads that it will roll out globally via automatic placements, further diversifying its ad mix away from app installs and brand budgets and giving it a suite of new features to monetize. Shares are down about 30% from their 2023 peak in February, the firm also notes.

3. Phillip Securities upgrades Airbnb to Buy following Q1 results

Phillip Securities upgraded Airbnb (ABNB) to Buy from Accumulate with a $143 price target, down from $149, following the Q1 results. The firm cites the recent pullback in shares for the upgrade and believes the Airbnb platform offers better non-urban location listings versus hotels, benefits travelers looking for long-term stays, and is more family and group travel-friendly.

4. Warner Bros. Discovery upgraded to Outperform at Barrington 

Barrington upgraded Warner Bros. Discovery (WBD) to Outperform from Market Perform and set an $18 price target on the shares. While the ultimate consumer reception to the rebranding and launch of Max is uncertain, and the writer’s strike will likely pose a near-term revenue headwind, management is "making impressive progress in moving the company to a sounder financial footing," while being diligent with content investments, the firm tells investors.

5. Bernstein upgrades Tapestry to Outperform, raises price target to $55

Bernstein upgraded Tapestry (TPR) to Outperform from Market Perform with a price target of $55, up from $50. The firm likes the long-term investment case for Tapestry, but downgraded to neutral in January 2023 expecting short-term North America weakness. Two quarters later, that weakness has played out and is built into guidance/consensus, inventory is back under control, and China demand for Coach is surging, Bernstein says. The firm continues to like the long-term story and attractive valuation.

Top 5 Sell Calls:

1. Wedbush cuts SoFi to Underperform as fair value accounting may present headwinds

Wedbush downgraded SoFi Technologies (SOFI) to Underperform from Neutral with a price target of $2.50, down from $5. The firm believes the company may be nearing a tipping point on the fee income it recognizes related to loan origination and sales, and capital levels may be overstated using fair value accounting and it may look to raise capital this year to support growth. While Wednbush does not expect SoFi to change its accounting methodology, nor does it expect SoFi to reduce its fair value mark assumptions in the near-term, the firm thinks regulators may look at SoFi’s accounting and may suggest operating under a more conservative capital requirement framework that contemplates a hypothetical switch to CECL accounting given SOFI is comfortable holding loans to maturity rather than selling them. Wedbush expects regulatory scrutiny on capital ratios and stress testing to intensify following the failures of SVB Financial (SIVB) and First Republic (FRC).

2. Selective Insurance downgraded to Underperform on valuation at BofA 

BofA downgraded Selective Insurance (SIGI) to Underperform from Neutral with a price target of $97, down from $101. The firm cites valuation for the downgrade. Selective should trade at a premium to the U.S. insurance industry, but its current relative valuation of 130% is at historical highs, BofA tells investors in a research note. In addition, the company has a higher casualty tilt versus the industry, and as pricing increases gradually remediate peer property margins, the stock could struggle to maintain its current premium, says the firm.

3. Commerce Bancshares downgraded to Underweight at Morgan Stanley

Morgan Stanley downgraded Commerce Bancshares (CBSH) to Underweight from Equal Weight with a price target of $48, down from $50. The downgrade is a "relative valuation" call, given how much the rest of the midcap bank group has de-rated, Morgan Stanley tells investors in a research note. The firm says Commerce Bancshares is among the three most expensive stocks in its coverage universe. While a valuation premium is justified for the stock, the current valuation gap is too wide, given the decline seen at peers, Morgan Stanley contends.

4. Williams downgrades On Holding to Sell on long term brand health concerns

Williams Trading downgraded On Holding (ONON) to Sell from Hold with a $26 price target. While On’s aggressive growth plans are driving "impressive" short term results and significant share gains against "pretty much every athletic footwear brand" except Deckers’ (DECK) HOKA and New Balance, the long term health of the On brand is not being protected as well as the management teams of HOKA and New Balance protect their brands, the firm contends. On management made it clear that they intend to keep supply below demand, but their focus on growth and on broad consumer acceptance has led the company to create too broad a spread of styles and "far too much inventory," Williams argues.

5. Morgan Stanley downgrades Futu Holdings to Underweight, lowers target to $34

Morgan Stanley downgraded Futu Holdings to Underweight from Equal Weight with a price target of $34, down from $44. Following Futu’s announcement of app removal in China, the firm sees higher risks of outflows of assets under management from existing onshore clients. The latest regulatory development brings more uncertainties about Futu’s existing onshore assets, and this his not not fully priced into the shares, Morgan Stanley tells investors. The firm thinks outflow risk could be driven by near-term sentiment as clients become more cautious.

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

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