Buy/Sell: Wall Street's Top 10 Stock Calls This Week - Sunday, Dec. 4

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What has Wall Street been buzzing about this week? Here are the top 5 buy and sell calls made by Wall Street’s best analysts during the week of Nov. 28 through Dec. 2, 2022. First, let's take a look at the top 5 buy calls.

UPS (UPS) – Deutsche Bank Upgrades Stock to Buy on Productivity Initiatives

On Nov. 28, Deutsche Bank analyst Amit Mehrotra upgraded UPS to Buy from Hold with a price target of $220, up from $197. While stating that it's "easy to be neutral or negative on UPS in the current environment," Mehrotra argues that past experiences argue that times like this are "exactly" when to get more bullish. 

In the near-term, the analyst thinks market participants are "overly focused" on volume growth and not on productivity initiatives that can drive positive revenue growth and solid contribution margins. Meanwhile, over the mid-term, he thinks upcoming contract negotiations will be "more benign than expected," and there is the potential for the negotiations to yield an opportunity for UPS to gain additional market share.

Crowdstrike (CRWD) & Palo Alto Networks (PANW) – Redburn Starts Both at Buy on Market Leadership and Valuation

On Dec. 1, Redburn analyst Nina Marques initiated coverage of Crowdstrike and Palo Alto Networks with Buy ratings and price targets of $175 and $270, respectively.

The analyst calls CrowdStrike "an innovative leader in the cybersecurity market, building solutions that leverage crowdsourced intelligence," and says she sees CrowdStrike continuing to win market share from legacy antivirus vendors, thanks to the industry's shift away from point solutions toward a platform-based approach. 

Regarding Palo Alto, Marques sees it as the leader in its main area of network security and continued strong demand for firewall security. Further, she believes Palo Alto can deliver both growth and free cash flow margins "at an attractive valuation."

Activision Blizzard (ATVI) – Wells Fargo, Morgan Stanley, and Truist Upgrade Stock to Buy-Equivalent Ratings

On Nov. 28, Wells Fargo analyst Brian Fitzgerald upgraded Activision Blizzard to Overweight from Equal Weight with a $95 price target. Given recent headlines surrounding the Microsoft-Activision Blizzard deal, the analyst is revisiting his valuation of the latter in a "no deal" scenario. 

Fitzgerald conservatively applies a 13.5-times multiple to consensus 2023 EBIT and account for an incremental $3 billion of cash on the balance sheet, arriving at a "breakup price" of $76. The analyst believes the market is undervaluing Activision relative to both outcomes -- deal or no deal.

Morgan Stanley analyst Matthew Cost also upgraded Activision Blizzard to Overweight from Equal Weight with a $95 price target as he took over coverage of the stock. He is "incrementally bullish" on its position as a leading diversified game publisher with strength across multiple platforms and genres. 

While calling it "challenging" to assess the likelihood that Microsoft's proposed acquisition receives regulatory approvals, Cost argues the risk reward is compelling on a fully standalone basis with "a call option" of $95 in cash per share if and when the deal closes.

Also more bullish on the name, Truist analyst Matthew Thornton upgraded Activision Blizzard to Buy from Hold with an $81 price target. The analyst sees a favorable risk-reward ratio and estimates $12 billion to $13 billion in net cash exiting 2023 absent buybacks and/or M&A. He puts the bullish case at $95, under which Microsoft closes the acquisition, and the bearish case at $62, and says Activision Blizzard should have a "big" 2023.

Wynn Resorts (WYNN) – JPMorgan Upgrades Stock to Overweight, Raises Price Target to $91

On Nov. 28, JPMorgan analyst Joseph Greff upgraded Wynn Resorts to Overweight from Neutral with a price target of $91, up from $71. The analyst thinks Wynn should benefit from a Macau recovery as COVID-19 restrictions are eased, which he says should reverse the stock's underperformance since the onset of the pandemic. 

Wynn shares are not very well owned, says Greff, who thinks Macau should benefit from China's recent plans to ease travel. The stock's valuation on 2024 is attractive, with the shares trading below historical averages, and buy-side expectations for sustained strong performance in Las Vegas and Boston "are subdued, creating a low bar," Greff tells investors in a research note.

AB InBev (BUD) – JPMorgan Double Upgrades Stock to Overweight with Transition “Well Underway”

On Nov. 28, JPMorgan analyst Jared Dinges double upgraded AB InBev to Overweight from Underweight with a price target of $70, up from $45. The analyst sees "scope for earnings outperformance," and says the company's "rapidly deleveraging balance sheet provides optionality." AB InBev's transition to a "higher-quality top-line growth story is well underway," Dinges tells investors in a research note. 

The analyst models 8.8% organic sales growth in fiscal 2023, supported by sustainable Latin America momentum, and "contrary to investor concerns," he sees upside in the U.S. and China. The company can deliver EBITDA growth above its medium-term guide in 2023 "with best-in-class" teens earnings growth from 2023 onwards, Dinges contends. He views AB InBev's valuation as attractive at current levels.

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

DraftKings (DKNG) – JPMorgan Downgrades Stock to Underweight with $12 Price Target

On Nov. 29, JPMorgan analyst Joseph Greff downgraded DraftKings to Underweight from Neutral with an unchanged price target of $12. The analyst sees downside in the shares following the post-earnings rally. 

DraftKings' path to online sports betting and internet gaming profitability is longer than peers' as "highlighted by a divergence in 2023 expectations," with the company guiding sizable EBTIDA losses while peers MGM Resorts and Caesars are at or near breakeven if not generating positive EBITDA, Greff tells investors in a research note.

Williams-Sonoma (WSM) – Morgan Stanley Downgrades the Stock to Underweight, Lowers Price Target to $100

On Nov. 28, Morgan Stanley analyst Simeon Gutman downgraded Williams-Sonoma to Underweight from Equal Weight with a price target of $100, down from $150. The company's earnings revisions could turn "sharply negative" in 2023, with the home furnishings category "negatively inflecting" as sales volumes continue to normalize, Gutman tells investors in a research note. 

The analyst sees "some initial cracks" in Williams-Sonoma's results, with demand comparables turning slightly negative for the first time since the start of the pandemic.

Beyond Meat (BYND) & Tyson Foods (TSN) – Barclays Downgrades Beyond Meat to Underweight, Says “Worst is Yet To Come”

On Nov. 28, Barclays analyst Benjamin Theurer downgraded Beyond Meat and Tyson Foods to Underweight from Equal Weight with price targets of $10 and $58, down from $13 and $89, respectively. The analyst says protein companies face a difficult outlook. The "worst is yet to come" for most of the sector, though not until 2024 or 20225, amid increasingly price-conscious consumers and rising beef prices, Theurer tells investors in a research note. 

Regarding Beyond Meat, the analyst notes the company is dealing with deteriorating economics in alternative meat and that higher beef prices won't necessarily translate into benefits for the industry.

Capital One Financial (COF) & Synchrony (SYF) – Morgan Stanley Downgrades Stocks to Underweight on Cautious View of What's Ahead in Consumer Finance Sector 

On Dec. 1, Morgan Stanley analyst Betsy Graseck downgraded Capital One Financial and Synchrony to Underweight from Equal Weight with price targets of $90 and $29, down from $115 and $31, respectively. The analyst is cautious on the consumer finance sector heading into 2023. 

The analyst expects higher credit losses, driven by a consumer cash flow squeeze from high inflation, rising unemployment, and less excess savings. With 22% of loans out to the bottom 40% of income earners, consumer loan delinquencies and net charge-offs will accelerate over the coming quarters, Graseck tells investors in a research note.

Saia (SAIA) – BofA Downgrades Stock to Underperform After Q4 Shipment Update

On Dec. 1, BofA analyst Ken Hoexter downgraded Saia to Underperform from Neutral with a price target of $215, down from $216, following the company's Q4-to-date tonnage and shipment update. Trends are deteriorating faster in November and by a wider margin than his monthly estimates, the analyst tells investors in a research note. 

Hoexter adds that the update should also have a negative read-through for Saia peers, with XPO Logistics also having confirmed that it was furloughing LTL employees at certain terminals.

More By This Author:

Here's What Wall Street Experts Are Saying About Salesforce Ahead Of Earnings
DraftKings Downgraded To Underweight From Neutral At JPMorgan
Buy/Sell: Wall Street's Top 10 Stock Calls This Week - Saturday, Nov. 26

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