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 March 4-8.
 
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Top 5 Buy Calls:

1. Nvidia initiated with an Outperform at CICC on AI computing leadership

CICC initiated coverage of Nvidia (NVDA) with an Outperform rating and $870 price target. Nvidia is a “pioneer” of accelerated computing that has advantages in artificial intelligence technologies and ecosystem and will likely benefit from the accelerating infrastructure construction for AI-generated content, the firm tells investors. Nvidia is reaping benefits from its increasing cloud capex and the short supply of computing power for the training of large language models, or LLMs, in the market and CICC expects it to maintain its leading position in AI computing on technological strengths and ecosystem advantages.

2. Target upgraded to Buy at HSBC

HSBC upgraded Target (TGT) to Buy from Hold with a price target of $195, up from $140. Target is “flipping the switch from go time to grow time” following the better-than-expected Q4 results and fiscal 2025 guidance, the firm tells investors in a research note. HSBC says the company is a true omnichannel retailer, blending 2,000 physical stores with digital sales, where stores operate as hubs for digital orders. Going forward the company plans to pick up its store opening pace and open 300 new stores, and extend its assortment with a focus on new partnerships all of which should strengthen further Target’s brand recognition, contends HSBC.

Target upgraded to Buy at Deutsche Bank

Deutsche Bank upgraded Target to Buy from Hold with a price target of $206, up from $149, post the Q4 report. The company’s initial 2024 guidance appears reasonable while leaving room for upside, the firm tells investors in a research note. With traffic improvements underway, and Target’s sales on track to inflect positively starting in Q2, Deutsche sees a number of drivers ahead for sustained same-store-sales growth and EBIT margin expansion, resulting in earnings per share of $10-plus “in the not-too-distant future.” The firm says the company is “hitting bullseye.”

3. Micron upgraded to Buy at Stifel

Stifel upgraded Micron Technology (MU) to Buy from Hold with a price target of $120, up from $80. Channel checks confirm DRAM supply is tightening and on a trajectory to recover into the 90s by mid-year, the firm tells investors in a research note. As such, Stifel sees leverage returning for Micron and believes consensus estimates for 2025 are “well wrong and too low.” The firm says there is a clear dual benefit toward converting DRAM wafer capacity to high bandwidth memory for Micron. It believes the shares are “moving through the sweet spot of what should be a more multiple-friendly, early expansion period.”

4. Rivian Automotive initiated with a Buy at Jefferies

Jefferies initiated coverage of Rivian Automotive (RIVN) with a Buy rating and $16 price target. Rivian has looked closest to Tesla (TSLA) in “spirit,” with its own software stack, strong brand identity, global potential, and similar growth pains, the firm tells investors in a research note.

5. DoorDash upgraded to Outperform at RBC Capital

RBC Capital upgraded DoorDash (DASH) to Outperform from Sector Perform with a price target of $175, up from $130. The firm believes the company’s new verticals and international expansion “may be on the doorstep of stabilizing profitability.” RBC says it underappreciated the resilience of DoorDash’s order growth due largely to frequency which should continue to be a multi-year mid-to-high-teens grower. It is also “intrigued” at the company’s optionality to establish partnerships, particularly Lyft (LYFT), which could drive significant incremental orders and put its loyalty program closer to equal footing with Uber (UBER).

Top 5 Sell Calls:

1. Victoria’s Secret downgraded to Underweight from Neutral at JPMorgan

JPMorgan downgraded Victoria’s Secret (VSCO) to Underweight from Neutral with a price target of $15, down from $22, following the Q4 report. The company’s sales growth and gross profit dollars have declined sequentially in an increasingly cautious macroeconomic backdrop, hindering the brand’s growth and profitability profile, the firm tells investors in a research note. JPMorgan sees Victoria’s Secret’s margins “constrained” in the next 12-24 months with limited visibility to a return to topline growth.

Victoria’s Secret double downgraded to Underperform at BofA

BofA double downgraded Victoria’s Secret to Underperform from Buy with a price target of $15, down from $34, based on the steep slowdown in sales trends and continued secular slowdown in the core lingerie market that led the company to issue weaker-than-expected FY24 guidance. The firm lowered its FY25 and FY25 EPS estimates by 35% and 43%, respectively, given challenged sales trends and higher-than-expected selling, general and administrative expenses and thinks a lower multiple is justified given the sales struggles and the firm’s expectation for lower margins.

2. CommScope downgraded to Underweight at JPMorgan

JPMorgan downgraded CommScope (COMM) to Underweight from Neutral without a price target. The company’s “tough start” to 2024 and limited catalysts sets it up for a significant decline in revenue and EBITDA year-over-year this year, including potentially marking a record for the lowest EBITDA since acquisition of Arris, the firm tells investors in a research note. JPMorgan says CommScope shares rank as one of the least preferred among its coverage universe at this time.

3. Barclays downgrades G-III Apparel to Underweight on lost sales, licenses

Barclays downgraded G-III Apparel (GIII) to Underweight from Equal Weight with a price target of $23, down from $30. The firm cites lost revenue from customer store closures, lost licenses which will occur over a five-year period, and muted interest in owned brands for the downgrade. While G-III is making efforts to replace the lost businesses, it will take longer to scale new brands, the firm tells investors in a research note. Barclays sees an approximate 2% revenue headwind over a three-year period from the announced Macy’s (M) store closures and says lost licenses which will begin to impact the business over the upcoming five-year period. The firm also believes the potential for acquisitions outside of the core women’s and outerwear businesses could carry additional execution.

4. QuidelOrtho downgraded to Sell at UBS

UBS downgraded QuidelOrtho (QDEL) to Sell from Neutral with a price target of $42, down from $70. The firm believes there is downside to guidance and consensus estimates, visibility is low, and there is a lack of near-term positive catalysts. UBS estimates QuidelOrtho’s current valuation implies organic decline of 3% in 2024 versus its model of 6%, leading to further potential share price depreciation. Respiratory and Savanna guidance are Q4 weighted, and the lack of near-term visibility presents downside risk to estimates, says the firm.

5. Ares Commercial double downgraded to Underperform at BofA on CRE exposure

BofA downgraded Ares Commercial (ACRE) to Underperform from Buy with a price target of $7, down from $11. Commercial real estate, or CRE, mortgage REITs outperformed other financial stocks in 2023, but the firm thinks the fundamental headwinds CRE faces are likely to persist throughout 2024 and it is cautious on CRE mREITs broadly this year.