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 May 20-24.
 
Find all top-rated stocks by the best-rated analysts on TipRanks.

Top 5 Buy Calls:

1. Shopify upgraded to Buy at Goldman Sachs

Goldman Sachs upgraded Shopify (SHOP) to Buy from Neutral with a price target of $74, up from $67. The shares are down 23% year-to-date due to an investment cycle weighing on margin expansion in 2024 and more mixed consumer spending data points, the analyst tells investors in a research note. However, Given Shopify’s “significant technology moat” in e-commerce software and share gain across cycles, the firm believes these investments will drive more durable revenue growth at scale. Goldman says the stock dislocation creates an entry point to own the leading software platform in retail.

2. Wynn Resorts upgraded to Buy at Argus on Macau rebound, strength in Vegas

Argus upgraded Wynn Resorts (WYNN) to Buy from Hold with a $110 price target. The firm contends that the prospects for a faster than-anticipated rebound in Macau, strength in Las Vegas, and solid results at the Encore Boston Harbor warrant a higher valuation. Wynn should also benefit from the return of convention groups to Las Vegas and expand its online sports betting business, Argus adds, boosting its FY24 EPS view by 95c to $5.90 and its FY25 view by 70c to $6.20.

3. Raymond James starts Caesars at Strong Buy on valuation

Raymond James initiated coverage of Caesars (CZR) with a Strong Buy rating and $55 price target as part of a broader research note on U.S. Gaming operators, also calling the stock the firm’s top pick in the group. The group’s disappointing Q1 results, macro headwinds, and weaker than expected digital performance have created “compelling” valuations, and while there are headwinds in both Las Vegas and the Regionals, the stocks are pricing in significantly worse fundamentals vs. reality, the firm tells investors in a research note. Raymond James adds that for Caesars, it sees a clear path to resolving both of the company’s issues – digital profitability and higher leverage – as the digital business beginning to deliver positive EBITDA and given the path for Caesars to meaningfully de-lever using free cash flow.

4. Ford initiated with Outperform on pending EV profits at Bernstein

Bernstein initiated coverage of Ford (F) with an Outperform rating and $16 price target. The company continues to enjoy strong profits from its core markets and a policy driven investment cycle in the U.S., the firm tells investors in a research note. Bernstein says that while Ford’s electric execution “looms large,” it sees a clear path to significant operating leverage and ultimately profits for the company’s EV unit. Bernstein sees 15% upside to consensus EBIT estimates in 2024, driven by a model refresh in the U.S., fewer losses in Model e and better cost control in the wider business.

5. Piper upgrades Kraft Heinz to Overweight on foodservice growth

Piper Sandler upgraded Kraft Heinz (KHC) to Overweight from Neutral with an unchanged price target of $42. The firm sees incrementally better visibility on Kraft Heinz’s upside in foodservice, helped by its new innovation in time-saving dispensers, which it expects can drive incremental revenues within existing relationships and some incremental distribution. Foodservice is just 14% of the company’s sales, but fast growing, and the unit’s growth will accelerate in 2025, helping either offset potential retail softness or driving upside to expectations, which should help the stock re-rate, Piper tells investors in a research note.

Top 5 Sell Calls:

1. VF Corp. downgraded to Sell at Williams Trading

Williams Trading downgraded VF Corp. (VFC) to Sell from Hold with a price target of $6, down from $13. After a “big” fiscal Q4 miss, no formal fiscal 2025 guidance, and ongoing weakness of Vans, Dickies, The North Face and Timberland, it’s clear VF’s “Reinvent transformation plan has a long way to go before it gets the core brands working again,” the firm tells investors in a research note. Williams Trading says any optimism around the plan “appears unfounded.” The lack of fiscal 2025 guidance makes the firm question the direction of the company, “and its ability to get out of its own way.”

2. Middleby downgraded to Underweight at JPMorgan

JPMorgan downgraded Middleby (MIDD) to Underweight from Neutral with a price target of $118, down from $145. The firm says the company’s backlog tailwind is behind it. Middleby’s backlog burn was higher in the second half of 2023 than the first half as the supply chain began to normalize, which suggests there is likely more downside to management’s current expectations, JPMorgan tells investors in a research note. The firm’s updated fiscal 2024 and 2025 EBITDA estimates are 5% and 12% below consensus, respectively. Middleby’s price-cost pressure rising and growth in 2025, as modeled by consensus, is not a given, contends JPMorgan.

3. Aon plc downgraded to Underperform at BofA

BofA downgraded Aon plc (AON) to Underperform from Neutral with a price target of $306, down from $345. Aon has recently underperformed the insurance broker group and re-establishing investor confidence is likely to take time with operational risk “currently skewed to the downside,” the firm contends.

4. NextEra Energy Partners downgraded to Underweight at JPMorgan

JPMorgan downgraded NextEra Energy Partners (NEP) to Underweight from Neutral with an unchanged price target of $25. The stock has traded up 25% in the last month, drifting away from the price target, the firm tells investors in a research note. JPMorgan does not view NextEra Energy Partners as a primary beneficiary of rising power demand and believes near-term risk remains around the company’s longer-term convertible equity portfolio financing obligations and its ability to accretively finance potential dropdown acquisitions.

5. Garmin downgraded to Underperform at BofA

BofA downgraded Garmin (GRMN) to Underperform from Neutral with a price target of $150, down from $165. Following the “impressive” 32% year-to-date rally, the firm worries that momentum is decelerating, which it says implies that the current valuation is “unsustainable.” Until BofA sees a case for the “aggressive” 2025 consensus EPS target, the valuation appears too rich with near-term potential downside.