Buy/Sell: Wall Street's Top 10 Stock Calls This Week - Saturday, April 22

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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 April 17-21. First, let's start with the top 5 buy calls of the week.


1. Netflix Upgraded to Buy from Neutral at UBS

UBS upgraded Netflix (NFLX) to Buy from Neutral with a price target of $390, up from $350, following quarterly results. The firm sees Netflix as the main beneficiary of easing competition in direct-to-consumer streaming as peers focus on profits.

This will drive upside to subscribers and pricing power in the coming years while also "keeping a lid" on content costs, one of the biggest swing factors for Netflix's profits and free cash flow, UBS tells investors in a research note. The firm sees a "compelling risk/reward" at current share levels and expects Netflix's growth to inflect in Q3 and beyond.


2. Walmart Upgraded to Buy at Gordon Haskett as Traffic Inflects Higher 

Gordon Haskett upgraded Walmart (WMT) to Buy from Accumulate with a price target of $165, up from $155. When the firm had previously upgraded the stock in early February, it cited the expectation that traffic trends would begin to inflect higher, "which is now beginning to manifest."

Walmart's foot traffic growth has improved sequentially in April by 1,120 basis points to 0.7% on a four-year basis, outperforming the firm's coverage and broader retail, notes Gordon Haskett, which thinks the company is likely benefiting from increasing wallet share from core customers in a softening macro backdrop and gaining share with higher-income customers.


3. HSBC Upgrades Nvidia to Buy, Raises Price Target to $355

HSBC double upgraded Nvidia (NVDA) to Buy from Reduce with a price target of $355, up from $175. The company's artificial intelligence opportunity more than offsets previous concerns over a data center slowdown and rising inventory levels, HSBC tells investors in a research note.

The firm is "shocked" by Nvidia's pricing power on AI chips, and sees it driving earnings upside and a higher valuation. It admits to being "too cautious" on Nvidia, and says the company's "incredible" AI pricing power not fully priced into the shares.


4. Comcast Upgraded to Overweight at Atlantic Equities

Atlantic Equities upgraded Comcast (CMCSA) to Overweight from Neutral with a price target of $44, up from $36. The shares have underperformed the S&P 500 Index by 30% over the past two years as broadband additions have dried up, and growth investors have exited the stock, firm tells investors in a research note.

However, Atlantic Equities believes broadband expectations are now "de-risked" with some potential upside to estimates as the housing market rebounds. Furthermore, in the event of a recession later this year, Comcast is well positioned as a defensive name, contends Atlantic.

The firm has also modeled an acquisition of Warner Bros. Discovery (WBD) and subsequent spin of the enlarged content business, and believes this could add $8 per share to Comcast.


5. General Electric Assumed at Buy from Hold at Jefferies

Jefferies upgraded General Electric (GE) to Buy from Hold with a price target of $120, up from $90, after a different analyst assumed coverage of the stock. GE Aerospace is a high-growth, profitable engine franchise that has "long-tail" revenue streams given its 70% services mix and $353 billion backlog, Jefferies tells investors. The firm sees a pathway for aerospace profit margins to ramp toward 20% by mid-decade from 18.3% in 2022.

Now, let's move on to the top 5 sell calls of the week.


1. Sprouts Farmers Market Initiated With an Underperform at Evercore ISI

Evercore ISI initiated coverage of Sprouts Farmers Market (SFM) with an Underperform rating and $29 price target. The firm believes the company is likely to cede market share due to its "outsized" West Coast exposure, relatively high price perception, and increased competition.

Sprouts adjusted EBIT Margin is up 170 basis points since 2019 and is likely to contract in a slowing environment, the analyst tells investors in a research note. In a decelerating consumer landscape, risk remains to traffic and margins for a grocer that is perceived to have a premium offering, Evercore ISI adds.


2. Helmerich & Payne Downgraded to Underweight at Morgan Stanley

Morgan Stanley downgraded Helmerich & Payne (HP) to Underweight from Equal Weight with a price target of $45, down from $60. The firm is cautious into the company's fiscal Q2, saying it sees higher free cash flow an earnings downside risk relative to peers. Morgan Stanley also reduced earnings and risk-reward estimates in energy services due to lower price deck assumptions and more conservative U.S. macro outlook.


3. JPMorgan More Bearish on Teradyne, Downgrades to Underweight from Neutral

JPMorgan downgraded Teradyne (TER) to Underweight from Neutral with a price target of $81, down from $90. The firm sees increasing risks around elevated expectations of a rebound in the company's revenue and earnings starting with the back half of 2023 and in 2024.

For the second half of 2023, in which consensus expects a 28% increase in revenue, JPMorgan sees downside "driven by lackluster demand" from Apple (AAPL), and for 2024 where consensus expects 25% revenue growth, it sees several areas of weak wafer fab equipment spend and limited demand impacting rebound expectations.


4. Acadia Healthcare Downgraded to Sell at Deutsche Bank on CTC Business Concerns

Deutsche Bank downgraded Acadia Healthcare (ACHC) to Sell from Hold with a price target of $63, down from $75. The firm is concerned that the methadone clinics CTC business could potentially shift from a 10% grower into a slower growth category or potentially a headwind with declining opioid patients.

While Deutsche Bank says it holds management "in high esteem," and acknowledges the timing of the impact of the negative drivers that cause its concern is "unclear," it believes "investors need to underwrite ACHC's growth with the short-term risk from Medicaid re-determination as well as the longer tail risk from the MAT Act and the drag that could have on" the CTC business.


5. Travel + Leisure Initiated With an Underperform at BofA 

BofA initiated coverage of Travel + Leisure (TNL) with an Underperform rating and $42 price target. While BofA likes Travel + Leisure's pivot to improve the credit quality of its customers and free cash flow conversion, the firm is concerned by near-term pressure on earnings from price normalization and travel and membership ramping below expectations.


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