Image Source: Pixabay

What has Wall Street been buzzing about this week? Here is a look at the top 5 buy calls and the top 5 sell calls made by Wall Street's best analysts during the trading week of Dec. 30, 2024 through Jan. 3, 2025. First, here are the top 5 buy calls of the week.

1. Ralph Lauren Upgraded to Buy on Rising Margins at Argus

Argus upgraded Ralph Lauren (RL) to Buy from Hold with a $250 price target. The company is working to increase its average unit retail growth by attracting younger and less price-sensitive customers, the firm tells investors in a research note.

Argus says Ralph's productivity enhancements, favorable cotton costs, and lower freight expense will help it boost margins. In addition, the economic reopening in China has boosted demand internationally, contends the firm.

2. Cloudflare Upgraded to Buy from Sell at Goldman Sachs

Goldman Sachs double upgraded Cloudflare (NET) to Buy from Sell with a price target of $140, up from $77. The firm sees "several positive catalysts" for the company to drive improving fundamentals and stock outperformance in 2025.

Cloudflare began making more meaningful changes to its go to market in the spring of 2023, led by Marc Boroditsky, who joined Cloudflare in November 2022 as Chief Revenue Officer, Goldman tells investors in a research note. The firm believes Cloudflare will benefit from ramping sales and marketing productivity through 2025. The firm's industry conversations suggest that artificial intelligence is moving more materially from training to inferencing use cases, consistent with Cloudflare's Q3 comments.

3. Argus Upgrades Yum! Brands to Buy on KFC, Taco Bell Growth

Argus upgraded Yum! Brands (YUM) to Buy from Hold with a price target of $155. The firm sees same-store sales at Kentucky Fried Chicken and Taco Bell driving growth for Yum! in 2025.

In addition, the company's artificial intelligence-driven marketing programs should help retain customers, boosting revenue and improving engagement, Argus tells investors in a research note. By using its "extensive" customer data, Yum is seeing higher returns on its marketing dollars, contends the firm.

4. American Airlines Upgraded to Outperform at Raymond James

Raymond James upgraded American Airlines (AAL) to Outperform from Market Perform with a $24 price target. The firm sees an attractive risk/reward on the shares into Q4 earnings given its above-consensus forecasts, which reflects an improved revenue outlook following American's early-December update.

The company faces an attractive competitive capacity set up, and anecdotal evidence indicates improved engagement with contracted corporate customers, Raymond James tells investors in a research note. Further, with American's new 10-year co-branded card deal effective 2026 with Citi, the company will maintain an elevated cash remuneration growth rate going forward, contends the firm.

5. Vertex Initiated With a Buy at DA Davidson

DA Davidson initiated coverage of Vertex (VERX) with a Buy rating and a $62 price target. Vertex "exhibits several characteristics exemplifying sustained value-capture and per-share compounding," such as a market with steady growth and favorable disruptive catalysts, a moat, a cost structure supportive of margin accretion, and a management team with "excellent capital allocation discipline and incentives," the firm tells investors.

While Vertex does face strong competition in providing indirect tax automation software, none of its peers can imitate its "referenceability" across several key industries, which is "a critical moat," DA Davidson added.

Next, here are the top 5 sell calls of the week.

1. Argus Double Downgrades Nordstrom, Does Not See Another Bidder

Argus double downgraded Nordstrom (JWN) to Sell from Buy. Nordstrom recently signed a definitive agreement under which members of the Nordstrom family and El Puerto de Liverpool will acquire all of the outstanding common shares of Nordstrom not already beneficially owned by the Nordstrom Family and Liverpool in an all-cash transaction valued at approximately $6.25 billion on an enterprise basis.

Under the terms of the agreement, Nordstrom common shareholders will receive $24.25 in cash for each share. Argus does not see another bidder emerging to pay a premium to the family's offer. As such, it suggests current shareholders take profits from the recent run-up in the share price.

2. SoFi Downgraded to Underperform at Keefe Bruyette

Keefe Bruyette downgraded SoFi Technologies (SOFI) to Underperform from Market Perform with a price target of $8, up from $7. Sofi shares moved up 57% in 2024, including 100% since September, largely driven by investor optimism regarding "high growth fintechs" following the election, the firm tells investors in a research note.

Keefe believes the improving macro environment, lower interest rates, and the company's success driving better profitability have "taken some teeth out of several bear theses," which justifies shifting its investment thesis towards a more long-term view of what a mature Sofi looks like. The firm's analysis indicates the stock's valuation has "become overstretched across a wide matrix of multiples," even if Sofi is successful at achieving its "ambitious" long-term targets.

3. Pebblebrook Hotel Downgraded to Underperform at Wedbush

Wedbush downgraded Pebblebrook Hotel (PEB) to Underperform from Neutral with a price target of $1,313. Pebblebrook maintains the greatest level of overall demand stemming from leisure transient customers at 45% in the sector, a segment which has been under pressure, the firm tells investors in a research note.

Wedbush says that with the recent spike in interest rates and "many economic questions" to start 2025, it is taking a more cautious approach to Pebblebrook's leisure transient demand.

4. BXP Downgraded to Underperform at Wedbush

Wedbush downgraded BXP (BXP) to Underperform from Neutral with a price target of $70, down from $81. The company has shown to be a "flight to quality," but is in an asset class that remains subject to questions around the relationship between utilization and occupancy, the firm tells investors in a research note.

Wedbush says Amazon's "quasi-about face" on return to the office in many of its markets may take some of the anticipation away from BXP's office upside in 2025. The firm does not see a positive catalyst for the shares.

5. CareTrust REIT Downgraded to Underperform at Wedbush

Wedbush downgraded CareTrust REIT (CTRE) to Underperform from Neutral with a price target of $26, down from $34. The firm says the "bloom will start to come off the rose" for CareTrust's skilled nursing facilities, as 2025 unfolds with political uncertainty around Medicare reimbursement and possible contention between the federal government and states that could also impact Medicaid. As such, Wedbush believes the stock's premium valuation will become "incrementally vulnerable."

The firm also downgraded Healthcare Realty Trust (HR) to Underperform from Neutral with a price target of $16, down from $18. The company "remains a work in progress," but the stock trades at a 2-to-3 turn multiple premium to its nearest peer, the firm tells investors in a research note. Wedbush says Healthcare Realty resetting leadership may "expend energy that could otherwise be directed toward growing the business."

More By This Author: