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 Nov. 18-22, 2024. First, here are the top 5 buy calls of the week.
1. Roku Upgraded to Outperform at Baird
Baird upgraded Roku () to Outperform from Neutral with a price target of $90, up from $70. The shares are down 25% year-to-date and are overlooking the “meaningful changes in the business and the attractive long-term opportunity,” the firm tells investors in a research note.Baird says its optimism is predicated on increasingly favorable industry trends, positive developments in Roku’s strategy, and “encouraging early indicators” in the company’s recent results. Investor expectations seem better calibrated following the Q3 report, and, from here, the firm sees potential upside to the estimates and valuation over time.
2. Robinhood Upgraded to Buy at Needham After Trump’s Election Win
Needham upgraded Robinhood () to Buy from Neutral with a $40 price target. Donald Trump’s election win stands to “materially benefit the company,” primarily via changes at the SEC, the firm contends. Needham believes Robinhood is attractively positioned for more crypto asset listings coming, noting that the company has historically limited its product suite to avoid SEC enforcement actions, but with a change in Chair, it believes Robinhood will launch new offerings, including the four new assets seen last week.The firm also expects a retail driven bull market to be in Robinhood’s favor as the company has been successful in launching “meme” related trading products which appeal to retail customers, Needham added. The Equity and Margin Business segments should act to dampen crypto revenue volatility and position Robinhood as “a ‘one-stop-shop’ for financial services,” the firm argues.
3. Palo Alto Networks Upgraded to Buy at Rosenblatt After “Strong” Q1 Performance
Rosenblatt upgraded Palo Alto Networks () to Buy from Neutral with a price target of $430, up from $390, driven by the “strong” Q1 performance and the evident success of its platform strategy, which is driving larger deals and “impressive” NGS ARR growth. The strategy, combined with the strong momentum of SASE and rapid adoption of Cortex/XSIAM, positions Palo Alto Networks for continued market leadership, the firm tells investors.
4. Chewy Upgraded to Buy from Underperform at BofA
BofA double upgraded Chewy () to Buy from Underperform with a price target of $40, up from $24. Shelters are still taking in more pets on a net basis and year-over-year pet spending is negative, but adoption trends have steadily improved since the start of this year and pet spending appears to have bottomed, the firm tells investors.Easier upcoming comparisons and commentary from the firm’s recent pet expert call make the firm confident that the industry can return to consistent low-to-mid single digit percentage growth, BofA added.
5. Salesforce Upgraded to Buy at Erste Group on Earnings Growth Potential
Erste Group upgraded Salesforce () to Buy from Hold. Salesforce is in a position to continuously increase its revenue and operating margin given its leading position in the areas of customer service, marketing automation, and, in particular, data analysis using AI, the firm tells investors. Earnings per share will increase at double-digit percentage rates in FY25 and FY26, but the stock is valued moderately lower than the sector average, Erste Group added.
Salesforce Initiated With an Outperform at Scotiabank
Scotiabank initiated coverage of Salesforce with an Outperform rating and a $425 price target. The firm, which names Salesforce a Top Pick in the group, says that after a “choppy year” for the software sector followed by a strong three months, there is an opportunity to generate alpha by continuing to own “clear market winners” as well as companies with re-rate potential on the benefits or artificial intelligence.Stock picking “has become more crucial than ever,” with the bulk of investor interest being in semiconductors to questions on why certain software businesses should still exist beyond five years, Scotiabank tells investors in a research note.Next, here are the top 5 sell calls of the week.
1. Fabrinet Downgraded to Sell at B. Riley
B. Riley downgraded Fabrinet () to Sell from Neutral with a price target of $178, down from $194. The analyst believes the trend of unbundling Nvidia’s () GPU platforms will adversely impact Fabrinet’s optics business. Amazon (), Microsoft (), and Meta () have been buying Nvidia’s GPU platforms, such as HGX H100, that contain other components, including optics, the firm tells investors in a research note.However, Riley’s latest checks indicate Amazon is about to change its purchasing model to buy just Nvidia’s GPUs, and make their own platforms. This won’t impact Nvidia’s GPU business, but will impact Nvidia’s optics business since it is about to lose one a major customer in Amazon, contends Riley. The firm says this unbundling trend could threaten Fabrinet’s optics business, since it is “just a matter of time before” Microsoft and Meta follow Amazon’s footsteps.
2. Redfin Downgraded to Sell at Goldman Sachs
Goldman Sachs downgraded Redfin () to Sell from Neutral with a price target of $6.50, up from $6. With the shares up 22% in the last 12 months and now trading at 88-times estimated 2025 enterprise value to EBITDA, a premium to key peers such as Compass (), Redfin’s valuation is unattractive, and there is downside to consensus EBITDA estimates, the firm tells investors in a research note.Goldman says U.S. existing home sales have been stagnant at 3.84 million and believe affordability could weigh on a housing recovery, creating risk to forecasts, including Fannie Mae’s outlook for 4.5 million U.S. existing home sales in 2025. In addition, agent commission pressures continue to intensify, which should pressure Redfin’s take-rate on commissions directly or reduce its differentiation as competitors decrease rates, contends the firm.
3. FIS Downgraded to Underperform at Exane BNP Paribas After Payments Survey
Exane BNP Paribas downgraded FIS () to Underperform from Neutral with an $80 price target, citing downside risk to Capital Market Solutions growth, less support from non-operational items to adjusted EPS growth, and what it views as a “demanding valuation.” The firm ran its annual Payment Survey, with 3,000 consumers in the U.S., UK, Germany, France, and Italy and said the results point to “another slow year ahead.”
4. TD Bank Downgraded to Underweight at Barclays
Barclays downgraded TD Bank () to Underweight from Equal Weight with a price target of CAD79, down from CAD80. The firm says Canadian bank earnings in Q4 should see seasonal headwinds, and the impact from lower rates though asset management should help fee revenue. It is changing ratings in the group ahead of the earnings reports. Barclays also looks for the banks’ initial takes on 2025.
5. Danimer Scientific Downgraded to Underweight at Piper Sandler
Piper Sandler downgraded Danimer Scientific () to Underweight from Neutral with a price target of $4, down from $40. The downgrade follows the release of Q3 earnings, Q4 guidance, and the effect of a 40-for-1 reverse split, which became effective Nov. 12, the firm tells investors in a research note.While the company has been awarded a federal loan guarantee for the construction of a new plant in Georgia, the final details of the loan still need to be worked out, though mid-cycle earnings could be in the $24 million range after the construction is completed, and Danimer is facing significant issues for cash generation over the next three to four quarters, Piper says. The firm does not see EBITDA turning positive until at least 2Q25, and it believes that before then, the company may need to find additional funding.More By This Author:Here’s What Wall Street Experts Are Saying About Nvidia Ahead Of EarningsInvizyne Technologies Jumps After IPOWall Street’s Top 10 Stock Calls This Week – Saturday, Nov. 16
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