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 February 19-23.

Find all top-rated stocks by the best-rated analysts on TipRanks.

Top 5 Buy Calls:

1. DoorDash upgraded to Overweight at Morgan Stanley

Morgan Stanley upgraded DoorDash (DASH) to Overweight from Equal Weight with a price target of $145, up from $135. The company’s improving user loyalty and category expansion provides confidence in Marketplace order growth of 16% annually through 2026, the firm tells investors in a research note. Morgan Stanley sees the company’s growth and profit execution driving better than expected free cash flow. DoorDash’s core restaurant and grocery growth runway “remains long” as it addresses $2.6T of offline spend, says the firm.

2. Southwest upgraded to Buy at Deutsche Bank

Deutsche Bank upgraded Southwest to Buy from Hold with a price target of $42, up from $28. The outlook for domestic capacity in 2024 has “dramatically changed” over the past four months as most airlines have moderated their growth plans following a second half of 2023 that was beset by over-supplied domestic markets, the firm tells investors in a research note. Deutsche believes more moderate domestic available seat mile growth for 2024 will have positive implications for domestic unit revenue performance, and by extension, should translate into solid sales performance for the domestic-focused names. As such, the firm upgraded Alaska (ALK), JetBlue (JBLU), and Southwest (LUV) to Buy from Hold.

3. Seaport positive on Booking Holdings fundamentals, starts with Buy

Seaport Research initiated coverage of Booking Holdings (BKNG) with a Buy rating and $4,380 price target. The firm is positive on Booking’s fundamentals saying the company is the clear leader in global online accommodations, with particular strength in Europe and Asia. Seaport Research expects high single digit long-term bookings and revenue growth, driven by global travel growth, online share gains, expansion of alternative accommodations, and increasing traction with Connected Trip. The firm expects continued EBITDA margin expansion for Booking Holdings due to strong organic traffic to its website and app.

4. US Foods upgraded to Buy from Neutral at UBS following Q4 results

UBS upgraded US Foods (USFD) to Buy from Neutral with a price target of $64, up from $47. Following the company’s Q4 results, UBS is becoming more bullish on US Foods based on expectations for further market share gains on the back of sales force investments and its differentiated tech platform as well as higher conviction that the company’s EBITDA growth trajectory is sustainable.

5. Whirlpool initiated with a Buy at Loop Capital

Loop Capital initiated coverage of Whirlpool (WHR) with a Buy rating and $140 price target. The firm says the “timing is right for the company” with the stock down 10% year-to-date. Loop expects investors to start discounting improving demand as interest rates gradually decline. Whirlpool’s long-term margin outlook is also improving as raw materials, energy, and logistics costs start to revert towards historical norms over time, the firm tells investors in a research note.

Top 5 Sell Calls:

1. Rivian Automotive downgraded to Underweight at JPMorgan, cut to Sell from Buy at UBS

JPMorgan downgraded Rivian Automotive (RIVN) to Underweight from Neutral with a price target of $11, down from $20, after “slashing” its estimates to account for substantially slower growth amid continued large losses. The company has fallen “far short” of its own targets for vehicle sales and production, “let alone the seemingly much more ebullient expectations of its investors,” and disappointing new guidance implies essentially no growth in 2024 that the firm sees hinting at growing demand problems that “leave little likelihood for a re-acceleration of growth” until at least 2026.

UBS also downgraded Rivian Automotive to Sell from Buy with a price target of $8, down from $24. The analyst had been optimistic on Rivian’s product and brand ultimately winning out. However, a rapidly changing electric vehicle backdrop caused the firm to reassess its demand view and makes the company’s current strategy “quite onerous on the ramp to profitability and cash flow.” UBS now sees “more tepid” demand for battery electric vehicles and Rivian’s product. The firm now sees material risk to outer-year consensus expectations. The company likely needs capital raises that now constitute a significant percentage of current market capitalization, the firm adds.

2. Home Depot downgraded to Reduce at HSBC

HSBC downgraded Home Depot (HD) to Reduce from Hold with an unchanged price target of $323. The company’s Q4 results were basically in line with estimates, but its sales momentum “remains poor, weighing on short-term profitability,” the firm tells investors in a research note. HSBC says “muted” industry fundamentals and macro headwinds make the 2024 outlook challenging for the home improvement market. It cites valuation and a lack of near-term catalysts for the downgrade.

3. Lucid Group downgraded to Underweight at Cantor Fitzgerald

Cantor Fitzgerald downgraded Lucid Group (LCID) to Underweight from Neutral with a price target of $4, down from $6. The firm cites the company’s “persistently high” negative gross margins, lower than expected annual production guidance, and lower demand for the downgrade. Cantor also cut estimates to reflect reduction in expected vehicle production and deliveries as well as lower expected selling prices. The firm says Lucid continues to lower vehicle prices in an effort to remain competitive with the industry.

4. Hexcel downgraded to Underweight at Morgan Stanley

Morgan Stanley downgraded Hexcel (HXL) to Underweight from Equal Weight with a price target of $66, down from $70. The firm’s estimates remain below Hexcel’s outlook as it expects a slower aircraft production ramp as a result of continued supply chain challenges and idiosyncratic issues facing Boeing (BA). The shares already trade at a premium to the historical aerospace upcycle multiple, Morgan Stanley tells investors in a research note. As such, the firm sees Hexcel’s risk/reward as largely skewed to the downside.

5. Thomson Reuters downgraded to Underperform at National Bank

National Bank downgraded Thomson Reuters (TRI) to Underperform from Sector Perform with an unchanged price target of C$210. The shares have performed “remarkably well” but Thomson Reuters’ valuation is “stretching to and beyond even the most magnificent,” the firm tells investors in a research note. National Bank says the stock trades at an enterprise value to EBITDA of 27-times 2024 estimates, with its U.S. information publisher peers trading at 23-times and European peers trading at 17.5-times, the firm tells investors in a research note.