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 June 5-June 9.
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Top 5 Buy Calls:
1. Wells Fargo starts Amazon at Overweight, names Top Pick in Internet
Wells Fargo initiated coverage of Amazon.com (AMZN) with an Overweight rating and $159 price target. The firm also designated the stock as a Top Pick overall in the Internet sector. The Street is overlooking comments made by CEO Andy Jassy at Amazon’s Annual General Meeting on May 24 that indicate the regional fulfillment center model is already having a meaningful impact to fulfillment and shipping efficiency, and the Amazon North America margins are set to return to 2018 levels in 2025, one year ahead of Street on waning inflation, Wells tells investors in a research note.
2. Uber initiated with an Overweight at Wells Fargo
Wells Fargo initiated coverage of Uber (UBER) with an Overweight rating and $50 price target. The firm notes that the company’s international competitors will retrench further, driven by regulatory issues or morose private company funding environment. At the same time, high-margin ads business is scaling, which should drive Uber’s FY24 EBITDA ahead of the Street, Wells tells investors in a research note.
3. T-Mobile upgraded to Outperform from Peer Perform at Wolfe Research
Wolfe Research upgraded T-Mobile (TMUS) to Outperform from Peer Perform with a $160 price target. Following the stock’s 21% year-to-date pullback, "investors need neither estimate nor multiple upside" for outperformance, the firm tells investors in a research note. While cable’s "aggressive" postpaid phone service prices have won 45% of 2023 industry net additions, T-Mobile’s "leading price/value proposition" positions it best for the majority of new subscribers who purchase three-plus lines per account, Wells adds. The firm further says the stock’s current valuation versus "healthy fundamentals imply minimal downside risk."
4. Atlantic Equities bullish on FedEx, initiates with an Overweight
Atlantic Equities initiated coverage of FedEx (FDX) with an Overweight rating and $265 price target. The company is through its cost reduction programs and is shifting to a "flexible, margin enhancing," ground focused integrated network, Atlantic Equities tells investors in a research note. The firm believes this will narrow the margin and valuation disparity to UPS (UPS). Atlantic says FedEx has the ability to drive stronger financial outperformance, relative multiple expansion and offset recessionary pressures through its cost out initiatives.
5. Cigna upgraded to Buy from Neutral at BofA
BofA upgraded Cigna (CI) to Buy from Neutral with an unchanged price target of $320. The firm sees an improving risk/reward given its "stronger than average" growth outlook for commercial and pharmacy benefit managers. Commercial growth should be supported by the resumption of Medicaid redeterminations, which mitigates recession risk, BofA tells investors in a research note. Meanwhile, biosimilars entering the market could accelerate earnings starting in the second half of 2023, the firm adds.
Top 5 Sell Calls:
1. Wells Fargo starts Etsy at Underweight on more growth-challenged phase
Wells Fargo initiated coverage of Etsy (ETSY) with an Underweight rating and $70 price target. Etsy’s customer acquisition efficiency metrics are deteriorating after years of torrid gross merchandise sales growth and take-rate expansion, while new buyer acquisition is much more expensive than pre-COVID, Wells tells investors in a research note. Etsy is entering a more growth-challenged phase and the firm expects multiple contraction to continue, the firm added.
2. Wells Fargo starts Airbnb at Underweight on competition and pricing pressure
Wells Fargo initiated coverage of Airbnb (ABNB) with an Underweight rating and $99 price target. While it makes sense for the company to introduce new products to combat ADR inflation, the firm does not see ‘Rooms’ being meaningful to its overall business. Consensus FY24 or FY25 incremental margin expectations of 44% and 50% do not appear to reflect the impact of lower pricing and higher competitive intensity, Wells added.
3. Wells Fargo starts Booking at Underweight, sees higher promo intensity
Wells Fargo initiated coverage of Booking Holdings (BKNG) with an Underweight rating and $2,257 price target. Increased references to merchandising in filings and earnings indicates higher promotional intensity, Wells tells investors in a research note. The firm added it is observing promotional intensity pressuring take-rate, partially offset by payments revenue.
4. Wells Fargo starts Expedia at Underweight, sees competition accelerating
Wells Fargo initiated coverage of Expedia (EXPE) with an Underweight rating and $93 price target. The firm sees a number of data points indicating elevated OTA competition. Wells doesn’t see evidence of a demonstrable shift toward direct traffic improving marketing efficiency.
5. Fisker downgraded to Underperform at Wolfe Research
Wolfe Research downgraded Fisker (FSR) to Underperform from Peer Perform with a $6 price target. The firm continues to view Fisker as the most speculative auto maker within its coverage. The company is attempting to build a brand within some of the most highly saturated Industry segments, including mass-market two-row crossovers and sedans, Wells tells investors in a research note. The firm says Fisker’s competitive landscape is becoming more intense as Tesla and several Chinese car makers "press their cost advantages."
Published first on TheFly
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