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 Bu-y calls and the top 5 Sell calls made by Wall Street’s best analysts during the week of April 1-5.

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

Top 5 Buy Calls:

1. Benchmark starts DoorDash with Buy on “ever-growing dominance”

Benchmark initiated coverage of DoorDash (DASH) with a Buy rating and $165 price target. The firm is positive on the company’s “ever-growing dominance” in restaurant delivery and the subsequent network effects its “massive” user and driver scale afford it to new retail vectors including grocery, convenience, and brick and mortar broadly. Benchmark expects DoorDash’s monetization potential of these emerging verticals to become more tangible over the next 12 months, leading to greater velocity of revenue and contribution margin that is not contemplated in consensus expectations.

2. UPS upgraded to Buy from Neutral at Redburn Atlantic

Redburn Atlantic upgraded UPS (UPS) to Buy from Neutral with a price target of $180. The firm believes UPS is at, or close to, trough revenue, volume, margin and share price levels. Key macroeconomic data is showing signs of improvement, which supports the expectation that UPS’s volumes will turn positive in Q2, Redburn tells investors in a research note. In addition, the firm says the company, at its March investor day, announced “compelling” three-year targets, focusing on returning to a 13%-plus EBIT margin via further headcount reduction, footprint consolidation and technology-enabled productivity.

3. Estee Lauder upgraded to Buy from Neutral at Citi

Citi upgraded Estee Lauder (EL) to Buy from Neutral with a price target of $175, up from $160. The firm believes the company is nearing a sales inflection point as channel inventories in Asia Pacific travel retail are normalizing and it is closer to balanced sell-in/sell-through. The company expanded and accelerated its profit recovery plan for fiscal 2025 and 2026, which “sets a floor on earnings” and allows the market to begin thinking about a path forward to normalized earnings for the company, Citi tells investors in a research note.

4. Wayfair upgraded to Outperform from In Line at Evercore ISI

Evercore ISI upgraded Wayfair (W) to Outperform from In Line with a price target of $80, up from $65. The firm sees Wayfair as a market share gainer in a “cyclically recovering” home furnishing market. The stock’s risk/reward is attractive as cost cuts have put a floor under the company’s adjusted EBITDA, which limits downside and offers attractive upside when revenues start to grow again, Evercore tells investors in a research note. The firm believes Wayfair’s “margin unlock is underappreciated by the market and provides an opportunity for a meaningful re-rating in the coming months.”

5. B. Riley starts ‘best-of-breed’ Booking Holdings with Buy rating

B. Riley initiated coverage of Booking Holdings (BKNG) with a Buy rating and $4,400 price target. The firm’s positive view on the stock is supported by the company’s prospects for sustained above-market growth rates, margin expansion, and efficient capital allocation, with a sizable share buyback contributing to earnings growth. B. Riley believes Booking’s “best-of-breed” selection and expanding product offering, large audience, global reach, and growing mix of direct traffic are key competitive advantages that will enable the company to sustain healthy growth rates and share gains for the foreseeable future. It finds the stock’s risk/reward profile as attractive.

Top 5 Sell Calls:

1. Block downgraded to Underweight from Equal Weight at Morgan Stanley

Morgan Stanley downgraded Block (SQ) to Underweight from Equal Weight with a price target of $60, down from $62. The firm’s demographic analysis suggests high market penetration and limited additional opportunity to expand banking and credit services for Block’s Cash App. Meanwhile, Morgan Stanley anticipates challenges to improving Square Seller growth. The market believes that Block can rapidly expand margins, primarily through cost cuts, while driving durable high-teens gross profit growth in Cash App and reaccelerating Square Seller volume growth, the firm tells investors in a research note.

2. Reddit initiated with an Underperform at Bernstein

Bernstein initiated coverage of Reddit (RDDT) with an Underperform rating and $40 price target. The firm says the company’s longer-term promises of growing the advertising base, profits being just around the corner and the “dream of all the non-ad upside – are promises we’ve heard too many times.” Pinterest (PINS) and Snap (SNAP) “continue to struggle to live up to their potential with higher engagement/commercial intent, better ad tools, and decent social graphs,” so “what hope does Reddit have with their worst-in-class engagement, anonymous user base, and NSFW content?,” asks the firm.

3. BofA double downgrades Petco on meaningful market share erosion

BofA double downgraded Petco (WOOF) to Underperform from Buy with a price target of $1.50, down from $5. The firm says Petco “has lost much of its competitive bite.” The company’s market share has eroded meaningfully as consumers have migrated to online to competitors with greater convenience and value, the analyst tells investors in a research note. BofA expects Petco’s profits to deteriorate further into the first half of 2024, adding to 11 straight quarters of declining profitability. The company has also slowed the opening of new vet hospitals, which help it differentiate versus peers, “another worrisome sign,” contends the firm.

4. Hertz downgraded to Sell from Neutral at Goldman Sachs

Goldman Sachs downgraded Hertz (HTZ) to Sell from Neutral with a price target of $7, down from $8. The firm believes the full extent of the company’s pricing, cost and unit pressures have not been priced into the shares. Hertz’s rightsizing of its fleet and stabilizing pricing may take longer and require more investment than previously expected, particularly with a fleet that appears 50% older than pre-pandemic, Goldman tells investors in a research note. In the meantime, the firm’s model expects trends to get worse before they get better, with no free cash flow generation in 2024, which it expects to remain a continued focus for investors.

5. Wells downgrades Bill to Underweight on “number of uncertainties”

Wells Fargo downgraded Bill (BILL) to Underweight from Equal Weight with a price target of $60, down from $70. Wells also added the stock to its Q2 “tactical ideas list.” While the company’s’ near-term trends have stabilized, the Street is “complacent around future expectations,” the firm tells investors in a research note. Wells believes estimates for Bill are more likely to move lower than higher in the months ahead. The firm sees a “number of uncertainties” for Bill, including added take rate questions post Visa and MasterCard settlement and the potential to expand the BofA relationship to the “back-book” becoming increasingly unlikely. The recent deterioration in Bill’s most reliable key performance indicators raise credible long-term monetization concerns, says Wells.