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 July 17-21. 
 
Find all top-rated stocks by the best-rated analysts on TipRanks.

Top 5 Buy Calls:

1.  Nvidia initiated with an Outperform at Wolfe Research

Wolfe Research initiated coverage of Nvidia (NVDA) with an Outperform rating and $570 price target. After the company’s strong Q1 earnings report, there is little investor debate about Nvidia’s dominance of artificial intelligence, or the potential growth rates, the firm tells investors in a research note. Wolfe Research sees more upside in the stock given Nvidia’s strong free cash flow.

2. Wolfe Research bullish on AMD, initiates with an Outperform

Wolfe Research initiated coverage of AMD (AMD) with an Outperform rating and $150 price target. Wolfe says inventory normalization, following excess inventory in both client and datacenter, will begin helping the company’s growth in the second half of 2023. The firm expects AMD’s share gains versus Intel (INTC) to continue.

3. Pinterest upgraded to Outperform from In Line at Evercore ISI

Evercore ISI upgraded Pinterest (PINS) to Outperform from In Line with a $41 price target. The firm sees “clear evidence” of digital ad spend stabilizing, and increasing evidence that the operational improvements new CEO Bill Ready has implemented at the company over the past year are bearing fruit, which are combining to create “something of a fundamental inflection point. ” Evercore ISI also calls the stock’s current valuation “reasonable for a company with the potential to generate sustained 30%+ EBITDA growth.”

4. Qualcomm initiated with an Outperform at Wolfe Research

Wolfe Research initiated coverage of Qualcomm (QCOM) with an Outperform rating and $145 price target. Handsets are nearing a cyclical trough after more than a year of inventory correction, and Qualcomm is shipping below customer consumption, which will allow for positive mean reversion once inventory normalizes, the analyst tells investors in a research note. The loss of iPhone modem revenue is a source of upside should Apple (AAPL) fail to qualify their modem, the firm says.

5. AB InBev upgraded to Overweight from Equal Weight at Morgan Stanley

Morgan Stanley upgraded AB InBev (BUD) to Overweight from Equal Weight with a price target of $68.50, up from $64. The new analyst at the firm who assumed coverage of the name has a “thematic preference” for the beer sub-sector in beverages over spirits, saying relative growth rates will converge and a commodity-led margin recovery will occur in in fiscal 2024, which primarily favors the brewers. Morgan Stanley sees a favorable risk/reward in AB InBev and names the stock its top sector pick.

Top 5 Sell Calls:

1. Carvana downgraded to Underperform from Sector Perform at RBC Capital

RBC Capital downgraded Carvana (CVNA) to Underperform from Sector Perform with a price target of $30, up from $9. The company’s “better” Q2 results, debt restructuring and newly enabled access to equity capital reduced liquidity risks, which is a “big positive for the stock,” the firm tells investors in a research note. However, RBC is “sticking to fundamentals” in downgrading the shares. The firm believes Carvana’s long-term margin improvements are now likely “overly appreciated” and a faster return to growth is likely necessary to cover debt costs. A significant dilution and expanding debt load post-restructure are “likely coming,” writes RBC. It expects the stock and “more measured fundamentals to converge over time if and when near-term volatility abates.”

2. Intel initiated with an Underperform at Wolfe Research

Wolfe Research initiated coverage of Intel with an Underperform rating and $27 price target. While an end of the inventory correction is in sight, pressure on the company’s cash flow won’t subside as Intel needs to continue investing, the firm tells investors in a research note. Wolfe feels this makes for an unattractive investment for 2024 as the rest of the industry recovers.

3. New Street downgrades Trade Desk to Sell on strategy questions

New Street downgraded Trade Desk (TTD) to Sell from Neutral with a price target of $69, up from $57. The firm sees Trade Desk shares trading down from recent highs, and then remaining range-bound as the market focuses more on evolving competitive dynamics, and the effectiveness of the company’s post-cookie identity strategy entering 2024. New Street remains bullish on the company’s long-term gross spend opportunity and says its data marketplace is growing more robust with the inclusion of more retail media partnerships. However, it remains cautious on the battle for economics with agencies and thinks questions remain on the outlook for Trade Desk’s identity strategy.

Meanwhile, Redburn initiated coverage of Trade Desk with a Sell rating and $34 price target. The firm thinks consensus expectations and market valuations are “too high” for Trade Desk. Redburn worries that “evidence of the former will lead to compression in the latter.” Trade Desk already enjoys a 70% share in the 20% of the connected TV market it serves, with consensus projecting the capture of 65% of total connected TV industry growth by 2028, the analyst tells investors in a research note. Redburn says this assumption disregards the high proportion of direct publisher deals bypassing Trade Desk, while market growth expectations “could also prove ambitious if macroeconomic pressures manifest.”

4. Lumentum downgraded to Underperform from Neutral at BofA

BofA downgraded Lumentum (LITE) to Underperform from Neutral with a $50 price target, citing “sluggish” telco capex, stretched valuation and “overstated” AI benefits. Overall, for the group, the firm remains “lukewarm” on second half semis demand heading into earnings, excluding product cycle themes in cloud/AI and cars/EV, BofA tells investors in a group preview note.

5. Wells Fargo double downgrades Omnicell to Underweight from Overweight

Wells Fargo double downgraded Omnicell (OMCL) to Underweight from Overweight with a price target of $56, down from $65. The shares are up 34% year-to-date but hurdle for the stock to keep advancing seems high given Omnicell’s premium valuation and risks to its guidance and consensus estimates, the firm tells investors in a research note. Wells believes the “sweeping changes” to the management team also increases near-term execution risk. The firm further thinks a “beat and raise” narrative is needed for the shares to keep working but says a guidance raise is unlikely. Omnicell may need strong intra-year bookings conversion and/or pull-forward from long-term backlog to hit numbers, which is unlikely as hospital budgets and staffing constraints persist, it writes.