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 June 12-June 16.
 
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Top 5 Buy Calls:

Tesla upgraded to Outperform from Neutral at KGI Securities

KGI Securities upgraded Tesla (TSLA) to Outperform from Neutral with a $335 price target. Tesla is seeing its "vast" U.S. investments in electric vehicle assembly and battery "bear fruit in 2023," KGI Securities tells investors in a research note. The firm views the company as the biggest beneficiary of Inflation Reduction Act and federal funding for EV charging infrastructure. Every Model 3 and Y sold now qualifies for as much as $7,500 in tax credits, and Tesla stands to receive billions of dollars in production tax credits for its battery operations, says KGI. In addition, the firm believes the company’s its artificial intelligence "prowess is underrated."

Estee Lauder upgraded to Buy from Hold at Berenberg

Berenberg upgraded Estee Lauder (EL) to Buy from Hold with a $243 price target, which implies 35% upside to the stock. Following the stock’s 27% selloff since the start of 2023 and a 16% rebase of consensus earnings expectations, Estee offers an attractive buying opportunity for investors, Berenberg tells investors in a research note. The firm expects an inflection in organic sales growth to 16% in fiscal 2024 and a return to the company’s medium-term earnings growth algorithm from fiscal 2025. It sees an attractive risk/reward profile at current share levels.

Oracle upgraded to Outperform from Peer Perform at Wolfe Research

Wolfe Research upgraded Oracle (ORCL) to Outperform from Peer Perform with a $130 price target, citing the company’s accelerating sales and earnings growth from cloud adoption and artificial intelligence tailwinds for the upgrade. The firm now has increased confidence and conviction that Oracle Cloud will "become the engine that accelerates top and bottom line growth for the company over the next three years." It sees OCI doubling market share, from 2% to 5%, by 2025.

Kohl’s upgraded to Outperform at TD Cowen after meeting with CEO

TD Cowen upgraded Kohl’s (KSS) to Outperform from Market Perform with a price target of $30, up from $23. After meeting with Tom Kingsbury, who was officially appointed Kohl’s CEO in early February and was the former CEO of Burlington Stores (BURL) from 2008 to 2019, the firm sees the executive leveraging his experience to "drive positive change" and make "pragmatic edits to the store." TD Cowen, which expects new home decor and gifting product, improved fashion execution, a simplified promotional strategy, and store layout revisions to drive "healthier and more consistent traffic," raised its FY24 estimates on conviction that the new merchandise could add a low-single digit percentage lift to the comp outlook.

Stifel upgrades Domino’s Pizza to Buy, sees stabilized delivery sales

Stifel upgraded Domino’s Pizza (DPZ) to Buy from Hold with a price target of $350, up from $320. The stock has performed poorly since 2021 as delivery sales have declined, franchisee profitability has fallen, and unit growth has slowed, causing management to reset its long-term top-line guidance, Stifel tells investors in a research note. The firm adds, however, that after meeting with Domino’s management, it believes that over the next 12 months, the company will stabilize delivery sales and continue growing carryout sales to new record levels. Stifel argues that better sales performance, lower commodity costs, and higher labor productivity should boost franchisee profitability, sparking greater unit growth.

Top 5 Sell Calls:

MSCI initiated with an Underperform at BofA

BofA initiated coverage of MSCI (MSCI) with an Underperform rating and $470 price target. The company has benefited from a first mover advantage in ESG scores and data, but that sales engine is slowing and data competition is escalating, BofA tells investors in a research note. The firm says this dynamic makes it hard to argue for valuation upside. It thinks MSCI shares already reflect the company’s compounding double-digit earnings growth, 97% recurring sales, and sticky customer relationships.

Bright Health downgraded to Underweight from Overweight at Barclays

Barclays double downgraded Bright Health (BHG) to Underweight from Overweight with a price target of $8, up from $4. The firm sees heightened liquidity risk as the company attempts to sell its MA business to bolster liquidity positioning, while also navigating a number of major strategic shifts in the overall business model, including new industry signs of additional pressure on Medicare MLR in Q2. Barclays does not see the company achieving positive EBITDA until 2025.

Peakstone Realty Trust initiated with an Underperform at BofA

BofA initiated coverage of Peakstone Realty Trust (PKST) with an Underperform rating and $27 price target. The real estate investment trust is focused on owning and operating industrial and office properties that are primarily net leased to single tenants, BofA tells investors in a research note. The firm says the company’s office exposure and high leverage supports an Underperform rating.

National Storage initiated with an Underweight at Wells Fargo

Wells Fargo initiated coverage of National Storage (NSA) with an Underweight rating and $36 price target. The firm sees near-term headwinds, including soft spring leasing, a more levered balance sheet and pockets of oversupply, although could see some opportunity longer-term. A more highly levered balance sheet and floating rate exposure create financing headwinds and limit National Storage’s ability to opportunistically ramp M&A, Wells adds.

California Water Service downgraded to Sell at UBS

UBS downgraded California Water Service (CWT) to Sell from Neutral with a price target of $51, down from $59, following continued delays in the California rate case. Applying the outcome of the last rate case to the current one leads to a 5% reduction in earnings forecasts and a five-year growth rate to the water utility average 7.0% from 8.5%, UBS tells investors in a research note. The firm says a delay in a final decision in the current case exposes California Water to volumetric risk because it prevents implementation of new decoupling mechanisms.

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