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 22-26.

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

Top 5 Buy Calls:

1. Craig-Hallum upgrades Nvidia to Buy, raises price target to $500

Craig-Hallum upgraded Nvidia (NVDA) to Buy from Hold with a price target of $500, up from $190. The firm notes that Nvidia’s Q2 guide is without precedent in terms of its upside to consensus estimates on a business that is already so large. Craig-Hallum thinks the key question is to what degree is this DC segment going to have sustainable demand, versus experiencing some sort of inventory burn in 2025. The firm lands on the side of continuing investment, and this leads it to its 2025 EPS estimate of $10. With the implied software requirement of the accelerated computing stack that drives stickiness and high margins, Craig-Hallum believes investors will be willing to pay consistently high valuations for this opportunity.

Wedbush upgrades Nvidia to Outperform following quarterly results

Wedbush upgraded Nvidia to Outperform from Neutral with a price target of $490, up from $290, following quarterly results. The firm notes that while heading into earnings, it was understood that AI demand was strong and would likely drive some upside. However, Wedbush believes the sheer magnitude of AI related growth implied by Nvidia’s outlook surprised everyone. To get to Nvidia’s $11B topline guide, the firm sees implied data center growth as having to be north of 100% year-over-year, the firm notes. While Wedbush believes demand levels need to be monitored, the firm also thinks it is correct to view Q2 and 2024 revenue levels as a new norm on which one should base forward revenue estimates.

Nvidia upgraded to Outperform at Baird on AI-related order momentum

Baird upgraded Nvidia to Outperform from Neutral with a price target of $475, up from $300. The firm had raised its estimates above consensus and added a Fresh Pick designation in March, reflecting channel feedback emerging about strong H100 orders, notably related to ChatGPT, but failed to upgrade at that time, the firm notes. However, it now says "annualized earnings of $10 are at reach within 2-3 quarters" as AI-related order momentum continues and its new EPS estimates assume continued AI-related momentum, driven by ChatGPT and large language models, which require GPUs.

2. DraftKings upgraded to Buy from Neutral at UBS

UBS upgraded DraftKings (DKNG) to Buy from Neutral with a price target of $30, up from $19. The firm cites higher revenue growth and greater flow through to EBITDA for the upgrade. UBS sees a runway for DraftKings to deliver 20%-plus annual revenue growth through 2026. The company is penetrating new states faster, seeing improvements in "structural hold," and its existing state vintages are growing attractively with higher gross gaming revenue per player, the firm tells investors in a research note.

3. Five9 resumed with a Buy at Roth MKM

Roth MKM resumed coverage of Five9 (FIVN) with a Buy rating and $80 price target. The firm is positive on the company’s leadership position in the $30B+ contact center-as-a-service market, its history of strong execution, and balanced growth and profitability as being "supportive of a materially higher valuation". Roth MKM adds that the emerging regenerative AI technologies are likely to spur faster CCaaS adoption after an initial slowing to prospect evaluations as deployment strategies evolve.

4. Wells starts "platform enabler" Mobileye with Overweight, $50 target

Wells Fargo initiated coverage of Mobileye Global (MBLY) with an Overweight rating and $50 price target. The key tenet to the positive thesis is Mobileye’s platform strategy and upside potential from SuperVision and Chauffeur adoption into 2024 and beyond, the firm tells investors in a research note. Wells believes Mobileye is at the early stages of being appreciated as a "platform enabler" for the auto industry’s drive toward fully autonomous vehicles over the next 10 years. It models SuperVision revenue to grow to $3.2B over the next five years, but sees an upside scenario implying over $7B.

5. Carnival upgraded to Buy from Neutral at Citi

Citi upgraded Carnival (CCL) to Buy from Neutral with a price target of $14, up from $10. The upgrade is based on Citi’s recent cruise work around pricing and web traffic, a belief that the company’s balance sheet is at a "turning point" with the opportunity to become "significantly less ugly" in the years to come, and the "increasingly-evident willingness of investors" to engage in the cruise space in general and Carnival in particular, the firm tells investors in a research note. Citi sees the latter as a tailwind for the stock’s valuation that will only get amplified when Carnival meets or exceeds expectations and begins deleveraging the balance sheet.

Top 5 Sell Calls:

1. Exane downgrades Shopify to Underperform on small business exposure

Exane BNP Paribas downgraded Shopify (SHOP)  to Underperform from Neutral. The firm sees "better opportunities elsewhere" given Shopify’s valuation relative to its expected sales growth. The company mainly sells into small businesses, whereas Workday (WDAY) main sells into large enterprises, the firm tells investors in a research note. Exane coupled the Shopify downgrade with an upgrade of Workday. It expects weakening in consumer spending in the U.S., especially on discretionary items, which it says is where Shopify has exposure.

2. Nike downgraded to Sell from Hold at Williams Trading

Williams Trading downgraded Nike (NKE) to Sell from Hold with a price target of $95, down from $120. The firm says Nike’s U.S. business has become "far more difficult than what was expected" when it reported Q3 earnings. In addition, Nike’s turnaround in China "appears to be choppy." The downgrade is based on the U.S. business, which will remain challenged through at least the first half of fiscal 2024, as well as a lack of new compelling product at a time when consumers may be becoming trained to look for promotions, Williams tells investors in a research note.

3. American Express downgraded to Sell from Neutral at Redburn

Redburn downgraded American Express (AXP) to Sell from Neutral with a $125 price target. The firm believes consensus expectations underestimate the cost of the company’s plan to expand outside of the U.S. With its credit card still highly geared to the U.S. market, tighter lending standards are set to weigh on American Express’ volume growth, Redburn tells investors in a research note.

4. Goldman Sachs downgrades Southwestern Energy to Sell, trims price target to $5

Goldman Sachs downgraded Southwestern Energy (SWN) to Sell from Neutral with a price target of $5, down from $5.75. Given the challenging gas price environment this year, the company has cut activity and is declining production with plans to be free cash flow neutral, Goldman tells investors in a research note. The firm believes Southwestern’s risk/reward looks more balanced following the stock’s year-to-date underperformance, but it sees downside risks to natural gas prices in 2024 from higher supply. It expects the company to generate less attractive free cash flow in 2023 and 2024 versus peers given its higher cash flow breakeven.

5. XPeng downgraded to Underweight from Equal Weight at Barclays

Barclays downgraded XPeng (XPEV) to Underweight from Equal Weight with a price target of $6, down from $8. The company reported "disappointing" Q1 results and provided a weaker than expected Q2 outlook, Barclays tells investors in a research note. The firm sees "multiple challenges" and a "highly uncertain outlook" for XPeng.

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