Buy/Sell: Wall Street’s top 10 stock calls 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 July 10-14. 
 
Find all top-rated stocks by the best-rated analysts on TipRanks.

Top 5 Buy Calls:

1. Microsoft upgraded to Buy from Neutral at UBS

UBS upgraded Microsoft (MSFT) to Buy from Neutral with a price target of $400, up from $345. With the “steep” Azure growth deceleration now poised to moderate, artificial intelligence catalysts ahead and the recent stock underperformance, a more positive stance on Microsoft seems warranted, UBS tells investors in a research note. The firm cites cloud stabilization and AI catalysts for the upgrade. UBS’s latest round of checks on Azure “suggest the backdrop remains tough but is no longer deteriorating – the worst may be behind us,” UBS adds.

2. Meta Platforms upgraded to Outperform at TD Cowen after Q2 ad checks

TD Cowen upgraded Meta Platforms (META) to Outperform from Market Perform with a price target of $345, up from $220. The firm, which raised its 2023-2028 estimates following positive Q2 advertising market checks, thinks consensus estimates are likely too low given potential monetization upside from Reels, Threads monetization optionality and the potential for more cost cuts.

3. DraftKings upgraded to Buy at BofA ahead of profitability inflection

BofA upgraded DraftKings (DKNG) to Buy from Neutral with a price target of $35, up from $25. Accelerating product and revenue momentum are “on the cusp” of driving an inflection in margins and profitability, BofA tells investors. Though the stock has outperformed in 2023, the firm thinks market share gains can drive near-term top line revisions, while cost leverage should drive bigger revisions in adjusted EBITDA than anticipated.

4. Snowflake upgraded to Outperform from Sector Perform at Scotiabank

Scotiabank upgraded Snowflake (SNOW) to Outperform from Sector Perform with a price target of $212, up from $137. Snowflake’s fiscal 2024 revenue is “now firmly underwritten, which was previously not the case,” Scotiabank ells investors in a research note. In addition, the company should benefit from a product cycle in fiscal 2025 and 2026, which formerly could not be accounted for,” writes the firm. Snowflake is now “exiting the storm clouds” with “smooth sailing ahead,” according to Scotiabank.

5. Eli Lilly initiated with a Buy at HSBC

HSBC initiated coverage of Eli Lilly (LLY) with a Buy rating and $560 price target. The firm initiated coverage on 19 U.S. and E.U. Biopharma names saying the sector players will have to compete for deals in a “shrinking pool” as the larger players grapple with loss of exclusivity on their drug portfolios. While the market focus remains on LOEs and pricing discussion, HSBC seeks opportunities created by the tailwinds from demographics, innovation and low valuations, HSBC tells investors in a research note. The firm’s preferred plays in the space are “quality growth” names Eli Lilly, Novo Nordisk (NVO), AstraZeneca (AZN), and Genmab (GMAB), “fallen angels” Roche (RHHBY), Merck Kgaa and Lonza, and “value” stock Pfizer (PFE), and “self-help” companies Novartis (NVS) and Sanofi (SNY). HSBC’s least preferred names are Bristol Myers Squibb (BMY), GSK (GSK), Moderna (MRNA) and Bayer (BAYRY).

Top 5 Sell Calls:

1. Coinbase downgraded to Underweight from Equal Weight at Barclays

Barclays downgraded Coinbase (COIN) to Underweight from Equal Weight with a price target of $70, up from $61. The company has surprised on revenues and costs in the past few quarters, but with volumes and USD Coin market cap “depressed,” a regulatory overhang that is likely to last for some time, and the significant recent runup in shares, there are few near-term drivers for Coinbase, particularly from a fundamental perspective, the firm tells investors in a research note.

2. SoFi downgraded to Underweight from Equal Weight at Morgan Stanley

Morgan Stanley downgraded SoFi Technologies (SOFI) to Underweight from Equal Weight with a price target of $7, up from $6.50. The shares are “mispriced” as they imply bank profitability ramps quickly, to 30%-plus return on tangible common equity, Morgan Stanley tells investors in a research note. The firm sees 15% by 2026 as more likely. Even if investors were to give SoFi credit for a 20%-plus ROTCE, the bank should be valued at 1.5-times price to tangible book value, not today’s 2.1-times, says Morgan Stanley. The firm adds that the company’s opportunity from the student loan restart is smaller than expected.

3. JPMorgan bearish on Carvana, downgrades to Underweight

JPMorgan downgraded Carvana (CVNA) to Underweight from Neutral with a $10 price target. The firm believes Carvana’s valuation “has once again disconnected materially from fundamentals.” The current valuation is baking in a stronger than anticipated return to growth and related operational leverage in 2024 and beyond “for which we have little conviction today,” JPMorgan tells investors in a research note. The firm sees a lack of support from the used car industry due to supply challenges as well as affordability pressures.

4. JetBlue downgraded to Underperform from In Line at Evercore ISI

Evercore ISI downgraded JetBlue (JBLU) to Underperform from In Line with an unchanged price target of $8. JetBlue is up 37% in one month following “an obviously negative fundamental outcome” in its lost Northeast Alliance, or NEA, ruling, says the firm, which adds that it believes the Spirit Airlines (SAVE) acquisition “ultimately gets done” while the premium JetBlue is paying for Spirit continues to expand as Spirit’s fundamentals continue to moderate. JetBlue’s balance sheet is “on a journey from average to worst,” Evercore said. While lower probability, there are NEA wind-down scenarios that “could be highly disruptive” to JetBlue’s second half capacity planning and cost execution, the firm added.

5. Redfin downgraded to Underperform from Neutral at DA Davidson

DA Davidson downgraded Redfin (RDFN) to Underperform from Neutral with an unchanged price target of $10. The shares are up 260% thus far in 2023 and up 47% over the past month, making Redfin the top performing name in the broader prop tech space by a wide margin, DA Davidson tells investors in a research note. Over the past few quarters, Redfin has made progress towards its goal of achieving sustainable profitability, but this early progress is now fully reflected in its current valuation, says the firm. It notes the company’s listings share gains are still lagging typical seasonality.