Buy/Sell: Wall Street's Top 10 Stock Calls This Week - Sunday, April 16

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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 10-14. First, let's start with the top 5 buy calls.


1. Shopify Upgraded to Outperform from Market Perform at JMP Securities

JMP Securities upgraded Shopify (SHOP) to Outperform from Market Perform with a $65 price target. Shopify's gross merchandise volume estimates represent upside, while there is "room for greater expense discipline," the firm tells investors in a research note.

JMP believes Shopify's fulfillment network investments are less than it initially feared, although there is upside to gross merchandise value projections as the company is gaining traction with larger enterprise businesses. Shopify has the opportunity to execute on cost synergies with Deliverr, and third-party traffic data suggests it continues to take share, the firm contends.


Shopify Initiated With an Outperform at Baird

Baird also initiated coverage of Shopify with an Outperform rating and a $55 price target as it launched coverage of companies across internet and digital services, saying each category has unique positives/risks in the current environment. The firm sees a variety of drivers supporting Shopify's revenue growth and margin expansion.


2. Citi Upgrades Merck to Buy, Raises Price Target to $130

Citi upgraded Merck (MRK) to Buy from Neutral with a price target of $130, up from $105. The firm "materially" increased estimates for Merck to reflect its novel antibody drug conjugates for cancer MK-2870/SKB-264 and cardiology agents sotatercept and MK-0616.

Each 12-month delay to Keytruda biosimilars represents a 7% increase in net present value, Citi tells investors in a research note. In addition, the company's portfolio has little Inflation Reduction Act related pricing risk given the rare disease, animal health, and vaccines exposure, the firm adds.


3. VF Corp. Double-Upgraded to Buy from Sell at Goldman Sachs

Goldman Sachs double upgraded VF Corp. (VFC) to Buy from Sell with a price target of $27, up from $26. VF's revenue and earnings trajectory has underperformed the market, but the stock is nearing an inflection point with the balance of catalysts "now weighted to the upside," Goldman tells investors in a research note.

The company's negative catalysts, including Vans weakness, wholesale inventory rebalancing, a right-sized dividend, and management turnover, are increasingly in the rearview mirror, the firm contends. Goldman believes VF's strategic initiatives to improve execution will drive relative outperformance in the stock.


4. UBS More Bullish on Goldman Sachs, Upgrades to Buy

UBS upgraded Goldman Sachs (GS) to Buy from Neutral, saying the shares are attractively priced as the company's outlook is "de-risked." The firm believes Goldman is well positioned to outperform amid the elevated levels of market volatility.

It also thinks the bank has the opportunity to accelerate the growth of its wealth management platform and transactional banking business through "attractively priced M&A." In addition, the stock is trading well below its valuation average over the last two years, contends UBS.


5. Philip Morris Resumed With a Buy at Stifel 

Stifel resumed coverage of Philip Morris (PM) with a Buy rating and a $114 price target. Stifel, who identifies Philip Morris as among the firm's top ideas in the space, believes it offers "superior growth potential" compared to both its tobacco and consumer staples peers.

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


1. Upstart Initiated With an Underweight at JPMorgan

JPMorgan initiated coverage of Upstart (UPST) with an Underweight rating and an $11 price target. The company benefited from pandemic stimulus, which drove consumer defaults to record lows, JPMorgan tells investors in a research note.

However, more recently, defaults have increased, institutional demand for Upstart's "riskier" unsecured consumer loans has waned, and losses on the company's held-for-investment portfolio "have swelled." And "shockingly," the shares are up 28% year-to-date, the firm notes. JPMorgan believes Upstart's business is "proving to be extremely cyclical and sensitive to the whims of its funding partners."


2. Jefferies Downgraded to Underweight Amid Higher Macro Uncertainty, Recession Risk

Morgan Stanley downgraded Jefferies Financial Group (JEF) to Underweight from Equal Weight with a price target of $27, down from $28, after assuming coverage of the name.

As Jefferies exits merchant banking, its mix shifts toward investment banking and markets, driving up its comp ratio to a 52%-54% range, Morgan Stanley tells investors in a research note. The firm says higher macro uncertainty and higher recession risk will weigh on the company's business mix. The downgrade is "tactical in nature and reflective of the environment we're in," writes Morgan Stanley.


3. Southwestern Energy Downgraded to Underweight as Headwinds Continue

Wells Fargo downgraded Southwestern Energy (SWN) to Underweight from Equal Weight with a price target of $5, down from $6. The firm sees continued headwinds due to the lack of capital returns and weak free cash flow generation in a weak gas price environment, though it thinks Southwestern is well-positioned in global LNG trade in 2025-plus.


4. Playtika Downgraded to Underperform from Neutral at BofA

BofA downgraded Playtika (PLTK) to Underperform from Neutral and maintained a $10 price target. Shares have rallied 28% in the last month, recently benefiting from positive tactical catalysts in the context of a depressed valuation entering 2023. However, BofA believes estimates for fiscal 2023 and fiscal 2024 will fall as a recession -- beginning in the second half of 2023 -- pressures mobile gamers to spend less.


5. MAA Downgraded to Underperform at Scotiabank After Supply Analysis

Scotiabank downgraded MAA (MAA) to Underperform from Sector Perform with a price target of $150, down from $163, following a new supply analysis for U.S. multifamily REITs. With job loss risk increasing across most U.S. markets, the firm now recommends a strategy of favoring multifamily portfolios where it forecasts less supply-risk and avoiding Sunbelt exposure due to heavier expected supply pressure.


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