Wall Street's Top 10 Stock Calls This Week - Saturday, Feb. 17

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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. 12-16, 2024. First, here are the top 5 buy calls of the week.

1. Block Initiated with a Buy at Benchmark

Benchmark initiated coverage of Block (SQ) with a Buy rating and a price target of $89. The company's improving outlook for profitability reflects significant operating leverage, while its effort to control expenses should enable Block to achieve its goal of a mid-20s adjusted operating margin by 2026, the firm tells investors in a research note.

2. Lowe's Upgraded to Overweight at JPMorgan

JPMorgan upgraded Lowe's (LOW) to Overweight from Neutral with a price target of $265, up from $210. The firm also added the shares to its Analyst Focus List as a value stock idea.

JPMorgan continues to believe that the company's headwinds are moderating, with trends ultimately reverting toward wage growth. Moreover, the company's largest category appliances are further along in the deflation process, the firm tells investors in a research note. JPMorgan recommends buying the shares ahead of the last estimate cut.

3. PepsiCo Upgraded to Buy at Citi

Citi upgraded PepsiCo (PEP) to Buy from Neutral with a price target of $195, up from $180. With a lower organic sales growth bar and a reset in market expectations, the setup looks more favorable along with PepsiCo's track record of meeting or beating guidance, the firm tells investors in a research note. Citi acknowledges volumes will likely remain pressured in the first half of 2024, but it believes that is now understood and reflected in the stock price.

4. Piper Sandler Upgrades Citi to Overweight, Raises Price Target to $63

Piper Sandler upgraded Citi (C) to Overweight from Neutral with a price target of $63, up from $56. The firm notes that the past couple of weeks have unfortunately given investors some reasons to disengage from the space. While the group's narrative has at least some newer questions, Piper believes Citigroup's unique story remains intact.

Though the turnaround will likely have some bumps along the way, the firm likes CEO Jane Fraser's more targeted view of the company, believes cost flexibility should support the overall outlook, and thinks the group's recent pullback has created a more attractive entry point for the shares.

5. Loop Starts Nvidia with Buy Rating and Street-High Price Target

Loop Capital initiated coverage of Nvidia (NVDA) with a Buy rating and a price target of $1,200, which is a high on the Street. There is "material upside" to Nvidia's Street estimates in 2024 and 2025, the firm tells investors.

While Loop acknowledges additional silicon providers and hyperscale-specific, internal silicon solutions will be coming online over the next few years, its work suggests Nvidia's largest customers will be taking everything the company can give them in 2024 and 2025.

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

1. Dropbox Cut to Underperform at BofA, Sell at Goldman

BofA double downgraded Dropbox (DBX) to Underperform from Buy with a price target of $28, down from $34, following the company's "disappointing" Q4 results and 2024 guidance. The bull thesis "has played out," and mounting headwinds create a challenging setup for 2024, the firm tells investors in a post-earnings note.

On Friday morning, Goldman Sachs also downgraded Dropbox to Sell from Neutral with a price target of $24, down from $26. The firm's Neutral thesis, which is predicated on the attainability of the calendar year 2023 growth target, margin support, and a relative discount to peers, has "run its course," and the firm thinks headwinds seen in the quarter may possibly compound in calendar 2024.

2. Hershey Downgraded to Underweight at Morgan Stanley

Morgan Stanley downgraded Hershey (HSY) to Underweight from Equal Weight with a price target of $183, down from $191. The firm is cautious on Hershey's mid-term outlook given outsized cocoa inflation, a tougher pricing environment, and weaker consumer demand for confectionery and popcorn. Morgan Stanley says cocoa cost pressures will weigh on the company's 2025 earnings. It sees a "2:1 bear:bull skew" at recent share levels.

3. Akamai Downgraded to Reduce at HSBC

HSBC downgraded Akamai Technologies (AKAM) to Reduce from Hold with a price target of $96, down from $109, following the Q4 report. The firm expects the company to miss 2024 guidance amid signs of further weakness in its core content delivery business.

HSBC cites lower earnings forecasts and a revised valuation multiple for the downgrade. As Akamai leverages its core content business to cross sell security and computer services, the firm is concerned about the persistent weakness in the content business.

4. Craig-Hallum Downgrades QuidelOrtho to Hold, Cuts Price Target to $50

Craig-Hallum downgraded QuidelOrtho (QDEL) to Hold from Buy with a price target of $50, down from $158. The firm says Q4 came in as one of the most surprising results it has seen in diagnostics in some time -- and not in a pleasant way for shareholders.

Much of the surprise came from January, where the picture for Q4 was painted as good. In reality, Q4 sales and EPS missed, while at the same time, 2024 was painted as an investment year with earnings effectively half of what the Street had modeled, Craig-Hallum notes.

Overall, the firm points out Q4 was a problematic quarter for QuidelOrtho, and 2024 does not look much better. The debt overhang is becoming a concern, and what investors need is to hope that Respiratory's range is set right, hope Savanna can hit its targets, and hope Labs remains strong, Craig-Hallum adds.

5. Children's Place Downgraded to Sell at B. Riley

B. Riley downgraded Children's Place (PLCE) to Sell from Neutral with a price target of $4, down from $19. The company has run-rate EBITDA of ($3.5 million), $265 million of net debt, limited availability on its credit line, and a $50 million to $75 million imminent seasonal funding need, the firm tells investors in a research note.

B. Riley sees the probability that Children's Place's share price reaches $4 or less in the next 12 months as high, and it does not believe the upside potential is either high or likely enough to compensate for what would be a highly speculative investment thesis.

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