Image Source: 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 trading week of Sept. 16-20, 2024. First, here are the top 5 buy calls of the week.
1. Nvidia Initiated With an Outperform at William Blair
William Blair initiated coverage of Nvidia () with an Outperform rating. Nvidia has a “long and storied history” of designing parallel computing systems to handle complex processing tasks, which historically has positioned Nvidia as a leader in niche markets like gaming, automotive, visualization, and high-performance computing, or HPC.However, the “rising AI tide has catapulted parallel computing to the forefront of the tech industry,” and has driven massive demand for the company’s GPUs and parallel computing stack. Nvidia’s data center revenue grew 217% in fiscal 2024 and is expected to grow 132% in fiscal 2025, exceeding $110 billion in revenue from $15 billion in fiscal 2023, the firm noted.
2. DoorDash Upgraded to Buy at BTIG following Positive Checks
BTIG upgraded DoorDash () to Buy from Neutral with a price target of $155, telling investors that the firm’s checks point to ongoing near-term strength and under-appreciated longer-term drivers that lead it to raise estimates “again.”DoorDash is hitting “important milestones” with positive EBIT and net income expected in the second half, while rideshare-delivery is “a scarce pocket of secular growth in consumer-facing Internet,” adds the firm, which wants to increase exposure relative to more mature categories of the Internet.
3. Shopify Upgraded to Buy at Redburn Atlantic
Redburn Atlantic upgraded Shopify () to Buy from Neutral with a $99 price target, which represents 40% upside. The company’s “industry-leading innovation, social media integrations, user-friendly platform and unique Shop Pay button functionality” make it best positioned to capitalize on the structural growth as Generation Z’s share of U.S. spending surpasses that of Baby Boomers, and its TikTok Shop prompts innovation across Western social media platforms, the firm tells investors in a research note.Redburn says Shopify’s ability to continue to win market share is backed by its “extensive” ecosystem and platform capabilities. It anticipates material enterprise merchant wins in 2025.
4. Arm Initiated With an Outperform at William Blair
William Blair initiated coverage of Arm () with an Outperform rating. The firm says Arm is a “critical vendor” of computing intellectual property with best-in-class” financials. Arm provides critical computing IP that underpins more than $200 billion in chip value across the mobile, automotive, internet of things, and data center markets, Blair tells investors in a research note. The firm believes Arm’s royalty/licensing revenue model drives best-in-class profitability.
5. Broadcom Initiated With an Outperform at William Blair
William Blair initiated coverage of Broadcom () with an Outperform rating. Broadcom is targeting $12 billion in AI revenue in FY24, and the firm sees room for continued steady growth into FY25 and FY26 driven by increasing custom chip demand, improved software monetization, recovery in non-AI semi chips, and accelerating growth of Ethernet AI network fabrics.Next, here are the top 5 sell calls of the week.
1. Five Below Downgraded to Underweight at JPMorgan
JPMorgan downgraded Five Below () to Underweight from Neutral with a price target of $95, up from $89. The firm’s recent fieldwork is pointing to Q3-to-date same-stores-sales through mid-September being down low-single-digits, with August comps down low-single-digits, but the first half of September showing “sequential improvement,” the firm tells investors in a research note.JPMorgan further cites Five Below management having reiterated a 3% comp necessary for operating margin expansion in FY25, but its model has only a 1% comp, with 50bps margin compression translating to only 2.5% EPS growth against consensus expectation of 6% growth.
2. Casey’s General Stores Downgraded to Underweight at JPMorgan
JPMorgan downgraded Casey’s General Stores () to Underweight from Neutral with a price target of $337, up from $300. The firm thinks Casey’s Prepared Foods margins will be negatively impacted by rising cheese costs, which will likely not be passed on to the customer fully.The company has not seen the relative uplift as more fuel exposed U.S. peers from fuel margin, JPMorgan tells investors in a research note. The firm adds that Casey’s also has high exposure to operating expenditure headwinds, given its higher per-store opex footprint with the standard store including a kitchen.
3. SolarEdge Downgraded to Underperform at Jefferies
Jefferies downgraded SolarEdge () to Underperform from Hold with a price target of $17, down from $27. Given “significant headwinds” in Europe from “persistently high” inventory levels and Chinese competition, as well as “stiff competition” in U.S., there is more downside to the stock as estimates are revised lower, the firm tells investors in a research note.Jefferies says uncertainty around SolarEdge’s CEO and backdrop on succession are concerns as well. The company’s pricing pressure is not priced into the shares, contends the firm.
4. FedEx Downgraded to Underweight at Morgan Stanley
Morgan Stanley downgraded FedEx () to Underweight from Equal Weight with a price target of $200, down from $215, following the company’s earnings report on Thursday evening. The company will need to earn almost $17 in earnings per share in the next three quarters to hit guidance “despite several market and idiosyncratic headwinds ahead,” the analyst tells investors.The firm says the magnitude of the fiscal Q1 shortfall, and the large gap between its forecasts and the recovery trajectory necessary to meet management’s guidance, may suggest greater earnings risk over a longer horizon than it had envisioned.
5. ResMed Downgraded to Underperform from Peer Perform at Wolfe Research
Wolfe Research downgraded ResMed () to Underperform from Peer Perform with a price target of $180. The firm says this is a risk/reward call triggered by its physician survey work. Wolfe believes Lilly’s launch of an obstructive sleep apnea indication for its GLP-1 medication tirzepatide “poses significant patient funnel disruption/distortion risks” for ResMed.Risks are poised to mount in 2025 following expected FDA approval for a sleep apnea indication during Q4, the firm tells investors in a research note. In addition, 50% of doctors expect to reduce CPAP volume due to introduction of GLP-1 drugs, contends Wolfe.More By This Author:Trio Of Biotech IPOs Climb In DebutWall Street’s Top 10 Stock Calls This Week – Saturday, Sept. 14Pheton, Powell Max Make Public Debut
Wall Street’s Top 10 Stock Calls This Week – Saturday, Sept. 21
