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 25-29.
 
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Top 5 Buy Calls:

DraftKings upgraded to Overweight from Neutral at JPMorgan

JPMorgan upgraded DraftKings (DKNG) to Overweight from Neutral with a price target of $37, up from $26. The firm recommends taking advantage of the 13% pullback in shares since late July. JPMorgan continues to think gambling is an appealing sector, with attractive same-store and new market growth prospects, against the backdrop of an industry-wide improving operating expense control environment. DraftKings has a “strong moat” that should allow it to compete against new entrants like ESPNBet and Fanatics, much like it competed against Caesars, the firm tells investors in a research note.

Pinterest initiated with a Buy at HSBC

HSBC initiated coverage of Pinterest (PINS) with a Buy rating and $32.10 price target. The company’s new CEO moved away from competing head on in the short-form videos space, enhanced operations and margins, and built upon Pinterest’s reputation for a positive user environment to better attract advertisers, the firm tells investors in a research note. HSBC believes the company has the right management team in place.

Tractor Supply upgraded to Buy from Neutral at DA Davidson

DA Davidson upgraded Tractor Supply (TSCO) to Buy from Neutral with a price target of $280, up from $250, in conjunction with the firm’s “Best-of-Breed Bison” initiative, which focuses on “best in class” companies with sustainable competitive moats. The firm believes Tractor Supply fits 11 of the 12 criteria required to qualify as a “Best-of-Breed Bison” name within the firm’s framework, including trading at a significant discount to intrinsic value, favorable market dynamics, consistent financial performance and a shareholder-oriented management team.

Wingstop upgraded to Buy from Hold at Stifel

Stifel upgraded Wingstop (WING) to Buy from Hold with a price target of $200, up from $180. The firm believes company is poised to “successfully lap” difficult comp comparisons in the the second half of 2023 as menu innovation and delivery channel growth, augmented by rapid expansion in the national ad fund, continue to build “top-of-mind awareness and drive incremental usage.” Wingstop’s growing scale also translates into better visibility into long-term food costs, Stifel tells investors in a research note.

Trade Desk initiated with a Buy at UBS

UBS initiated coverage of Trade Desk (TTD) with a Buy rating and $100 price target. The firm expects a more accelerated cadence of linear advertising budget migrations to connected TV in the U.S. Meanwhile, Trade Desk’s retail media partnerships are scaling outside of Walmart, UBS tells investors in a research note.

Top 5 Sell Calls:

Snap initiated with a Reduce at HSBC

HSBC initiated coverage of Snap (SNAP) with a Reduce rating and $7.50 price target. Snap has been struggling with an adverse advertising industry climate and a social media landscape that is moving in the direction of the creator driven short-form media content popularized by TikTok, the firm tells investors in a research note. HSBC believes the “growing gulf” in content, user engagement, advertising solutions, and financial resources between the leading players and Snap likely precludes a successful turnaround of the business.

Illumina initiated with an Underperform at Bernstein

Bernstein initiated coverage of Illumina (ILMN) with an Underperform rating and $111 price target. The firm says the U.S. life science tools and diagnostics has the same positives as other healthcare sub-sectors, like enduring growth drivers, customers with locked-in processes, increasingly higher-margin/higher recurring revenue, and positive price, as well as a few of the negatives, like high levels of risk from pharma’s patent cliffs and managed care mis-pricing. Bernstein views Illumina as the relative “loser” in next-generation gene sequencing and calls Guardant its top pick among the molecular diagnostics companies.

RTX initiated with a Sell at Deutsche Bank

Deutsche Bank initiated coverage of RTX (RTX) with a Sell rating and $70 price target. The firm says between the latest revelations at P&W and the additional risks it still sees on the horizon, it’s not clear that an inflection point is imminent for RTX. Further, the stock is not “sufficiently cheap to fully compensate for the company’s risk profile.” Deutsche Bank tells investors in a research note. The firm is looking for proof points of an operational inflection in the quarters ahead.

Zions Bancorp downgraded to Underweight at Morgan Stanley

Morgan Stanley downgraded Zions Bancorp (ZION) to Underweight from Equal Weight with a price target of $32, up from $27. After a 70% rally from the May lows, Zions is now trading in-line with peers after having consistently been at a discount for the majority of 2023, the firm tells investors in a research note. Morgan Stanley believes this skews the stock’s risk/reward to the downside in a higher for longer rate environment.

Lincoln Electric initiated with a Sell at UBS

UBS initiated coverage of Lincoln Electric (LECO) with a Sell rating and $170 price target. The firm believes the stock’s risk is skewed 1.8-to-1 to the downside. The shares are pricing in adjusted EBIT margin of 18.2%, materially higher than UBS’s estimates and implying incremental margin sustained at 30%, a level that has only been achieved by the company in five out of 58 quarters since 2009, UBS tells investors in a research note. The firm’s analysis indicates Lincoln Electric’s automation margin will remain dilutive to total company results.