Buy/Sell: Wall Street's Top 10 Stock Calls This Week - Saturday, Feb. 25

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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 Feb. 20-24. First, let's start with the top 5 buy calls.

Goldman Ups Nvidia to Buy, Says “Wrong” to Have Been Waiting on the Sidelines

On Feb. 23, Goldman Sachs upgraded Nvidia (NVDA) to Buy from Neutral with a price target of $275, up from $162, based on a normalized EPS estimate of $5.00, up from $4.50 on higher peak EPS. The company "delivered an impressive quarter," and in hindsight, the firm acknowledges that its "decision to remain on the sidelines in anticipation of a pullback in the company's fundamentals was wrong."

While recognizing that the stock has meaningfully outperformed the group year-to-date, Goldman believes the combination of positive estimate revisions and a potential expansion in the stock's multiple consistent with historical recovery phases will drive continued outperformance.

DA Davidson Upgrades Shopify on the Recent Pullback on Shares

On Feb. 22, DA Davidson upgraded Shopify (SHOP) to Buy from Neutral with an unchanged price target of $50. The firm believes the over 20% selloff post-earnings has created an attractive entry point. Current consensus estimates could prove conservative, and a return to small losses "is a fleeting issue," DA Davidson tells investors in a research note.

The firm views the opportunity for Shopify audiences as underappreciated, and the firm is "encouraged" by Shopify's competitive positioning in the mobile market. It sees Shopify as one of the most important software companies.

Loop Capital Starts Walgreens Boots at Buy, Sees Higher Growth from Healthcare

On Feb. 23, Loop Capital initiated coverage of Walgreens Boots Alliance (WBA) with a Buy rating and a $45 price target. The company's new healthcare platform will "significantly enhance" the value of its stores to consumers by affording them more convenient access to healthcare services, the firm tells investors in a research note.

Loop Capital adds that Walgreens' assembled portfolio of healthcare providers should strengthen its core retail business and accelerate its growth and profitability by increasing its engagement with consumers.

SVB Securities Upgrades Teladoc to Outperform as Bear Thesis is Reflected in Shares

On Feb. 23, SVB Securities upgraded Teladoc (TDOC) to Outperform from Market Perform with a $34 price target. The firm "fully acknowledges" that the call will be met with a high level of pushback, given the company's miss in Q1 2023 guidance.

While SVB expects shares will be down, with Teladoc's bear case largely playing out over the past year and a half, it believes the valuation will fully reflect the downside scenario-effectively, and it will be past the final overhang. The firm sees a setup of achievable 2023 guidance that has baked in meaningful conservatism around macro factors and a narrowing pool of incremental negative datapoints, all against the backdrop of 19% short interest.

Wolfe Upgrades Merck with Pipeline “Big Enough to Matter”

On Feb. 22, Wolfe Research upgraded Merck (MRK) to Outperform from Peer Perform with a $127 price target. The company "finally has a pipeline that is big enough to matter," the firm tells investors in a research note. Wolfe Research says that given the various sources of optionality that lie ahead for Merck, either in the pipeline or in the base business, further multiple expansion of shares is possible.

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

JPMorgan cuts AutoNation to Underweight, Sees Capital Deployment Having Little Accretion

On Feb. 21, JPMorgan downgraded AutoNation (AN) to Underweight from Neutral with a price target of $130, up from $125. The firm believes the company's recent capital deployment will have little accretion in the near-term.

AutoNation's investments are expected to increase, buybacks are likely to take a step back, and its move to more acquisitions and related execution credibility "will take time to establish," JPMorgan tells investors in a research note. As such, the firm sees a less attractive risk/reward ratio at current share levels.

UBS Downgrades DocuSign to Sell Following Another Workforce Reduction

On Feb. 21, UBS downgraded DocuSign (DOCU) to Sell from Neutral with a $52 price target. The company had recently announced a 10% workforce reduction after the 9% reduction in September, sending a negative demand signal about 2024 growth that may not be factored into the stock, the firm noted. Its free cash flow also does not look compelling relative to other low-growth software peers, UBS added.

Wells Fargo Downgrades Cable One to Underweight on Key Negative Catalysts

On Feb. 21, Wells Fargo downgraded Cable One (CABO) to Underweight from Equal Weight with a price target of $680, down from $850. Slowing broadband subscriber growth, likely stemming from competition, is a key negative catalyst that will de-rate shares of Cable One, the firm tells investors in a research note. Wells says slower subscriber growth and "rapid" video declines combined to warrant a lower multiple for the shares

BTIG Downgrades LGI Homes to Sell on Stock’s Relative Valuation

On Feb. 22, BTIG downgraded LGI Homes (LGIH) to Sell from Neutral with a $73 price target. The downgrade is largely based on the stock's relative valuation as opposed to a specific catalyst or change in view on housing demand, the firm tells investors in a research note.

BTIG sees LGI's relative and absolute valuation as high. The stock carries a 36% premium to the group, though the company's return on equity will not exceed cost of equity this year, the firm says. BTIG also believes LGI's customer base is the most sensitive to interest rates among all the builders it covers.

More Bearish, Evercore ISI Cuts Occidental Petroleum to Underperform

On Feb. 22, Evercore ISI downgraded Occidental Petroleum (OXY) to Underperform from In Line with a price target of $60, down from $74. The firm says the overhang from the redemption of preferred shares should persist over the near- to mid-term.

In addition, Occidental has less crude leverage than previously perceived, the firm tells investors in a research note. Evercore ISI expects the stock to be more range-bound than peers, and it views Occidental as a good source of funds.

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