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 June 17-21.
 
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Top 5 Buy Calls:

1. Skyworks upgraded to Buy at B. Riley

B. Riley upgraded Skyworks (SWKS) to Buy from Neutral with a price target of $130, up from $96, ahead of the July 8 through 11 SEMICON West industry event. The magnitude and pace of AI-led fundamental and financial acceleration seems unprecedented outside the late ’90s Internet 1.0 build-out, the firm tells investors in a research note. B. Riley believes 2024’s event could offer particularly consequential fundamental and stock takeaways, as data center-centric AI training product cycles add inferencing engines in the data center and at the edge in high-volume applications.

2. Kroger upgraded to Outperform at BMO Capital

BMO Capital upgraded Kroger (KR) to Outperform from Market Perform with a price target of $60, up from $58. The stock has pulled back on fear over increasing price investments across the space, but the firm believes these are largely vendor-funded with a smaller component of retailer-funded promotions and believes Kroger’s positioning allows it to continue managing the competitive environment with stable gross margins. In addition, BMO sees the pending Albertsons (ACI) deal as “a win-win under either a deal or no-deal scenario,” noting that it raised its FY25 and FY26 EPS estimates and adding that it estimates higher year-one EPS accretion under a no-deal scenario.

3. Best Buy upgraded to Buy at UBS

UBS upgraded Best Buy (BBY) to Buy from Neutral with a price target of $106, up from $85. The firm believes the shares offer a compelling risk-reward to invest behind as it sees several drivers of potential upside over the next 18 months, including an improvement in housing trends, a pending electronics replacement cycle, higher levels of product innovation including AI and growing sales of new categories like e-bikes, furniture, and others.

4. Capri upgraded to Buy at Citi on upside potential regardless of Tapestry deal

Citi upgraded Capri Holdings (CPRI) to Buy from Neutral with a price target of $41, down from $56. Though results have been weak at Capri, there is still a signed deal in place for Tapestry (TPR) to acquire the company at $57 and the firm believes the risk/reward skews positive because Tapestry management is committed to the acquisition and it does not see the merits of the lawsuit. The stock at $31.70 is 8% lower than where it traded before the deal was announced, noted Citi, which does not know if the judge in the U.S. FTC suit will side with the companies, but builds a “falls through” scenario into a range of outcomes that the firm assesses to set its target and rating. To arrive at its price target, the firm equally weights three scenarios: $57 per share, which assumes the deal gets approved at the current offer price; $42 per share, which assumes the deal goes through at a lower price or that the Tapestry deal falls through and Capri pursues a sale with another party; and $24 per share, which assumes the deal falls through.

5. Wedbush bullish on Trade Desk, initiates with an Outperform

Wedbush initiated coverage of Trade Desk (TTD) with an Outperform rating and $110 price target. The firm sees multiple drivers to support sustainable, 20%-plus topline growth, including the ongoing shift to programmatic CTV advertising from linear TV, offsite retail media growth, and international expansion supported by recent investments to increase share outside the U.S. Near-term, Wedbush sees a number of catalysts that could drive upside to estimates, including tailwinds from U.S. political spend in the second half of 2024 and the rollout of recent CTV partnerships with key publishers. The firm’s estimates for 2024 and 2025 revenue are 1% and 3% above consensus, respectively, and it expects the company will sustain a 22% CAGR over the next four years.

Top 5 Sell Calls:

1. Esperion downgraded to Underperform at BofA

BofA downgraded Esperion (ESPR) to Underperform from Neutral with a price target of $2.50, down from $2.90, on renewed competitive concerns after Merck (MRK) posted plans last week to study its oral PCSK9, MK-0616, against Esperion’s bempedoic acid. The firm would argue this is a signal that the pharma company intends on directly challenging its small-to-mid cap rival, the analyst tells investors.

2. Prelude Therapeutics downgraded to Underweight at Barclays

Barclays downgraded Prelude Therapeutics (PRLD) to Underweight from Equal Weight with an unchanged price target of $3. Prelude’s upcoming catalysts are “intriguing,” but the firm currently finds them “hard to derisk” and sees limited upside in the next 12 months along with greater upside potential across its coverage universe.

3. Wedbush downgrades Zentalis to Underperform on unclear path for azenosertib

Wedbush downgraded Zentalis (ZNTL) to Underperform from Neutral with a price target of $4, down from $15, after the company reported that the FDA has placed a partial clinical hold on WEE1 inhibitor azenosertib monotherapy Phase 1 and Phase 2 studies TETON and DENALI because of two recent drug-related deaths due to presumed sepsis on the DENALI study. The firm says it is “admittedly surprised” by the news. Ultimately, Wedbush expects the partial clinical holds to be lifted as the FDA receives additional information around the deaths, patient monitoring is increased, and additional supportive measures are implemented.

4. Louisiana-Pacific downgraded to Sell at Goldman Sachs

Goldman Sachs downgraded Louisiana-Pacific (LPX) to Sell from Neutral with a price target of $81, down from $89. Though the firm recognizes the superior characteristics of Louisiana-Pacific’s offerings, along with recent distribution wins, its more cautious view reflects expectations R&R spend is likely to stay lower for longer along with industry-specific dynamics.

5. SSP Group downgraded to Sell at Goldman Sachs

Goldman Sachs downgraded SSP Group (SSPPF) to Sell from Neutral with a price target of 160 GBp, down from 255 GBp. While SSP has an attractive long-term growth opportunity, the firm expects the shares to continue to underperform on a 12-month basis see given further downside risk to EPS consensus estimates and relatively limited free cash flow generation over the next three years.