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 29 – June 2.
 
Find all top-rated stocks by the best-rated analysts on TipRanks.

Top 5 Buy Calls:

1. Johnson & Johnson resumed with a Buy at Citi

Citi resumed coverage of Johnson & Johnson (JNJ) with a Buy rating and $185 price target following a period of restriction. Following the initial public offering of Kenvue (KVUE), Johnson & Johnson has "world-leading" medical technology and pharmaceutical franchises, the firm tells investors in a research note. While the macro economic environment continues to pressure, the company’s patient volumes are recovering, and its new product pipeline is "robust," says Citi.

2. Ford upgraded to Buy from Hold at Jefferies 

Jefferies upgraded Ford (F) to Buy from Hold with a price target of $16, up from $13. Last week’s investor event increased confidence that Ford finally has the plan and management team in place to "close a deficit of execution that has dogged shares for years," Jefferies tells investors in a research note. The firm says the gap between Ford’s ambitions of 10% margin by 2026 and consensus estimates "stuck below 6%" is attractive. Roth expects sequential improvements across divisions for Ford.

3. Atlantic Equities upgrades Coinbase to Overweight with unchanged $70 price target

Atlantic Equities analyst Simon Clinch upgraded Coinbase (COIN) to Overweight from Neutral with an unchanged price target of $70. The company’s Q1 results confirmed management’s focus on returning the business to sustainable profitability, Atlantic Equities tells investors in a research note. The firm says Coinbase is regaining custody asset share and is also leveraging its trust credentials to exercise pricing power. These are both important steps "towards building resilience in the model," writes Atlantic. It believes Coinbase’s recent actions allow investors to look through near-term risks towards the longer-term opportunity.

4. Gordon Haskett says "No Guts, No Glory," upgrades Macy’s after 34% year-to-date decline

Gordon Haskett upgraded Macy’s (M) to Buy from Hold with an $18 price target, which it points out in a note partially titled "No Guts, No Glory" suggests over 30% upside from today’s levels. When the firm previously downgraded the stock in late March, it cited concerns that macro issues could put pressure on the company’s sales as well as "the hockey-stick nature of its top-line guide," which at that point "appeared unachievable." However, with the company’s 2023 EPS guidance post today’s roughly 25% reduction "now more appropriately positioned" and the stock down about 34% year-to-date, the firm argues that "the risk/reward is more favorable."

5. Domino’s Pizza upgraded to Overweight from Neutral at JPMorgan 

JPMorgan upgraded Domino’s Pizza (DPZ) to Overweight from Neutral with a price target of $360, up from $340. A fresh look at estimates shows the stock is "too cheap" for Domino’s "structurally low cost delivery" at $6.99 for a medium two-topping and take-out provider for a $7.99 3-topping large pizza, JPMorgan tells investors in a research note. The firm says franchisees have little reason to close stores as the average U.S. franchise had seven units and $140,000 cash flow per unit in fiscal 2022 compared to $143,000 per unit in 2019. JPMorgan views the stock’s risk/reward favorable at below $300.

Top 5 Sell Calls:

1. Six Flags initiated with a Sell at Goldman Sachs

Goldman Sachs initiated coverage of Six Flags (SIX) with a Sell rating and $26 price target. The firm believes greater uncertainty and execution risk from the company’s turnaround strategy provides a "tough setup" for Six Flags shares. Though the company’s 40% attendance declines in 2022 provide easy compares, consensus estimates are still mis-modeling per cap growth in 2023, as well as the company’s ongoing investment necessary in advertising and new rides, Goldman tells investors in a research note.

2. Wolfe Research downgrades U.S. Steel to Underperform with $19 price target

Wolfe Research downgraded U.S. Steel (X) to Underperform from Peer Perform with a $19 price target. The firm says falling sheet, tubular and Europe prices hurt U.S. Steel’s outlook. Headwinds have grown from falling Central European sheet and global oil country tubular goods prices, Wolfe tells investors in a research note. The firm believes U.S. Steel’s earnings "can disappoint ahead" and is switching to a more defensive positioning.

3. Lennar initiated with a Sell at Deutsche Bank 

Deutsche Bank initiated coverage of Lennar (LEN) with a Sell rating and $105 price target. The firm sees Lennar "fundamentally underperforming" D.R. Horton (DHI) within the homebuilding business over the near, medium and longer term, the analyst tells investors. In the context, the firm anticipates that the relative valuation gap between the two will also continue to widen, Deutsche noted.

4. UBS starts Bright Horizons with a Sell, says near-term estimates too high 

UBS initiated coverage of Bright Horizons (BFAM) with a Sell rating and $79 price target. Consensus expects EBIT margin expansion in 2024 that is "well above" the firm’s forecast. To reach consensus, UBS estimates that tuition increases would have to exceed wage inflation by greater than 300 basis points, which it says has historically not occurred when wage inflation is greater than 1%. The firm’s 2024 EPS estimates are 14% below consensus and it sees 5%-10% stock downside as the earnings outlook gets "calibrated lower."

5. Cheniere Energy Partners downgraded to Underperform at Wolfe Research

Wolfe Research analyst Alex Kania downgraded Cheniere Energy Partners (CQP) to Underperform from Peer Perform with a $43 price target. Cheniere Energy Partners has solid cash flows but the shares appear fully valued, Wolfe tells investors in a research note. The firm sees "significantly more value" in the company’s parent Cheniere Energy (LNG) on its cash flows, growth potential and capital return plan.

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