Salesforce upgraded, Southwest downgraded: Wall Street’s top analyst calls

The most talked about and market moving research calls around Wall Street are now in one place. Here are today’s research calls that investors need to know, as compiled by The Fly.

Top 5 Upgrades:

• BofA upgraded American Airlines (AAL) to Neutral from Underperform with a price target of $20, up from $12. American should benefit from the strong trends discussed by Delta (DAL) last week, including solid premium revenues, a build back of corporate travel, and growth on Atlantic route, BofA says.
• Citi upgraded Cloudflare (NET) to Buy from Neutral with a price target of $145, up from $95. While there is “clearly ample optimism already embedded in the stock,” Citi has higher conviction on Cloudflare’s ability to sustainably deliver 27%-30% annual revenue growth, the analyst tells investors in a research note.
• KeyBanc upgraded Applied Materials (AMAT) and Lam Research (LRCX) to Overweight from Sector Weight. The firm is positioning itself for names leveraged to artificial intelligence-related devices and leading edge transitions like gate-all-around and technologies that support improving device performance, including backside power delivery and advanced packaging.
• TD Cowen upgraded Salesforce (CRM) to Buy from Hold with a price target of $400, up from $380. Following an end of 2024 rally amid Agentforce excitement,” the shares have pulled back, “creating a compelling entry point,” the analyst tells investors in a research note.
• Barclays double upgraded Lumentum (LITE) to Overweight from Underweight with a price target of $125, up from $80. The firm says the combination of “massive” port count increases, combined with a strong desire to use a U.S. supply chain, have driven hyperscalers to “qualify at an alarmingly fast rate.”

Top 5 Downgrades:

• Wolfe Research downgraded Spotify (SPOT) to Peer Perform from Outperform and removed the firm’s prior $560 price target. Spotify offers a highly durable growth story with an improving ROIC profile and “plenty of optionality,” but revenue forecasts “look full” following price hikes, marketing cuts and developed markets beginning to saturate, the firm says.
• Given less exposure to corporate, premium, and international routes, BofA downgraded both Southwest (LUV) and JetBlue (JBLU) to Underperform from Neutral, arguing that both airlines trade at the high end of historical valuation ranges despite less exposure to “the strongest industry trends.”
• Evercore ISI downgraded Warby Parker (WRBY) to In Line from Outperform with a $23 price target. Shares have surged nearly 100% over the last four months and the firm finds the risk reward outlook to be “less compelling at current levels,” the analyst tells investors.
• Williams Trading downgraded Crocs (CROX) to Hold from Buy with a price target of $112, down from $127. Crocs trends are weakening and HEYDUDE trends remain weak and show “no signs of improving,” the analyst says.
• UBS downgraded Charles River (CRL) to Neutral from Buy with a price target of $185, down from $250. The Neutral rating reflects a view that the company’s mid-term sales growth has “structurally decelerated,” the analyst tells investors in a research note.

Top 5 Initiations:

• TD Cowen initiated coverage of ConocoPhillips (COP) with a Buy rating and $125 price target. The company’s “unique” scale, inventory depth and synergy targets following the Marathon Oil acquisition close set the stage for ongoing sustainable improvements in capital efficiency, the analyst tells investors in a research note.
• Cantor Fitzgerald last night initiated coverage of 18 names in infrastructure and artificial intelligence software, with discussions suggesting that the value proposition of infrastructure software will increase, driven by the ongoing secular expansion of AI and generative AI, the analyst tells investors in a research note. Cantor’s top ideas are MongoDB (MDB), Oracle (ORCL), and Monday.com (MNDY).
• Alliance Global Partners initiated coverage of BrightSpire Capital (BRSP) with a Buy rating and $7.25 price target. The Buy rating is based on restart of new loan originations, a balance sheet with “ample liquidity,” a dividend yield of 11.2% and risk/reward the firm views as “skewed to the upside” at the current valuation, the analyst tells investors.
• UBS initiated coverage of Semtech (SMTC) with a Buy rating and $85 price target. UBS says the company’s recent refinancing is not yet reflected in consensus and a possible portfolio rationalization “could be the impetus for the market to reconsider Semtech’s valuation.”
• Stifel initiated coverage of Flutter Entertainment (FLUT) with a Buy rating and $320 price target. Consensus “appears reasonable” approaching initial FY25 guidance, says the firm.