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 September 4-8.
 
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Top 5 Buy Calls:

1. Wells Fargo upgrades McDonald’s to Overweight after pullback

Wells Fargo upgraded McDonald’s (MCD) to Overweight from Equal Weight with an unchanged price target of $310. As broader quick service restaurant trends slow, McDonald’s should “stand tall” given its innovation tailwinds, digital initiatives and the consumer “flight to value,” the firm tells investors in a research note. The recent pullback in the shares creates an opportunity to own a best in class operator, with clear comp and margin upside and near-term catalysts from the ongoing Best Burger roll out, contends Wells. It sees an entry point at current share levels.

2. Oracle upgraded to Overweight from Equal Weight at Barclays

Barclays upgraded Oracle (ORCL) to Overweight from Equal Weight with a price target of $150, up from $126. The firm  sees a “multi-year opportunity for solid growth at high margins,” driven by an ongoing positive mix effect of better software-as-a-service and cloud outweighing the lower growth parts of the business. Oracle Cloud, partly fueled by emerging artificial intelligence workloads, will be key to the database and overall story, Barclays tells investors in a research note. It calls Oracle a “multi-year growth story.

3. Lowe’s initiated with a Buy at Stifel

Stifel initiated coverage of Lowe’s (LOW) with a Buy rating and $270 price target. The firm, which has “a positive bias to the home improvement category,” says Home Depot (HD) and Lowe’s have achieved leadership in U.S. home improvement retail and argues that both are “likely to build upon their leading positions.” While Stifel believes Home Depot is better positioned to lead category growth, supporting a sustained premium valuation for the shares, it is cautious on the amplitude of the category recovery with interest rates remaining elevated, which drives its “bifurcated approach to Home Depot and Lowe’s.”

4. Constellation Brands upgraded to Outperform at TD Cowen

TD Cowen upgraded Constellation Brands (STZ)  to Outperform from Market Perform with a price target of $300, up from $240. While the company had to take on debt to buyout the Sands family, that move has “meaningfully de-risked the capital allocation story,” the firm tells investors in a research note. TD Cowen says that while higher interest expense looks to be a drag to Constellation’s fiscal 2024 net income growth, with deleverage, that will become a tailwind in fiscal 2024. And once the company finishes its $4.0B-$4.5B in beer capex in fiscal 2026, it will be is well positioned to buyback at least $1B in stock per year, it notes. The firm further believes a sale of the wine and spirits business could also be a consideration, as it would provide an incremental $4B for buybacks, and also raise the stock’s multiple by eliminating the “drag from this slower/no growth business with a dilutive segment level margin.”

5. Morgan Stanley upgrades First Solar to Equal Weight, raises target to $206

Morgan Stanley upgraded First Solar (FSLR) to Equal Weight from Underweight with a price target of $206, up from $180. The firm continues to see long-term risk to First Solar’s margin profile as competition among domestic solar panel manufacturers increases. However, Morgan Stanley acknowledges that the company’s “substantial” 77.8 GW backlog de-risks its earnings profile through 2026. This warrants a premium multiple versus peers, the firm tells investors in a research note. Morgan Stanley does not see a “clear and high-conviction catalyst to the downside” for the shares.

Top 5 Sell Calls:

1. Dell Technologies downgraded to Underweight from Equal Weight at Barclays

Barclays downgraded Dell Technologies (DELL) to Underweight from Equal Weight with an unchanged price target of $53, citing valuation for the downgrade following the stock’s recent run-up. The firm sees challenges in the PC and server/storage end markets on the macro environment, and does not think artificial intelligence will be enough to offset these pressures. Dell’s valuation has moved out of near- and long-term trading ranges, Barclays tells investors in a research note.

2. Cloudflare initiated with an Underperform at BofA

BofA initiated coverage of Cloudflare (NET) with an Underperform rating and $52 price target. The company faces “two major challenges” in softening enterprise demand and convincing customers to adopt new solutions like Zero Trust and Edge Compute, the firm tells investors in a research note. BofA believes Cloudflare’s challenges to address the enterprise market could drive lower estimates than the Street anticipates. It finds the stock expensive versus peers.

3. Polestar Automotive downgraded to Underweight from Equal Weight at Barclays

Barclays downgraded Polestar Automotive (PSNY) to Underweight from Equal Weight with a price target of $3, down from $5, citing demand challenges and dilution concerns. Polestar’s near-term is increasingly challenged amid weakened electric vehicle demand and tougher competition, Barclays tells investors in a research note. The firm says that while its new models can help, the company is “likely to remain niche.”

4. BofA downgrades Agiliti to Underperform, lowers target to $11

BofA downgraded Agiliti Health (AGTI) to Underperform from Neutral with a price target of $11, down from $18. The firm sees low visibility into the company’s organic growth in the near-term. It is now clear when Agiliti’s utilization will normalize nor when its contracts will reach optimal margins, BofA tells investors in a research note. These pressers will likely persist for at least the next six months and potentially longer, contends the firm.

5. Pampa Energia downgraded to Reduce from Hold at HSBC

HSBC downgraded Pampa Energia (PAM) to Reduce from Hold with an unchanged price target of $30. The firm cites valuation for the downgrade with the shares up 60% year-to-date. While the October elections in Argentina are a possible game changer, it is too soon to tell, HSBC tells investors in a research note.