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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 trading week of July 15-19, 2024. First, here are the top 5 buy calls of the week.

1. Apple Upgraded to Buy at Loop Capital

Loop Capital upgraded Apple (AAPL) to Buy from Hold with a price target of $300, up from $170. Loop's supply chain work suggests that Apple has an opportunity over the next few years to solidify itself as consumer's generative artificial intelligence "base camp" of choice, just as it did for social media 15 years ago with the iPhone and digital content consumption 20 years ago with the iPod, the firm tells investors in a research note.

Each of those trends were material stock catalysts, and the basic math suggests that generative AI "has the opportunity to be the same," contends Loop. The firm says Apple is looking to "3-peat as the platform of choice."

2. William Blair Upgrades Block on Improving Square Execution

William Blair upgraded Block (SQ) to Outperform from Market Perform without a price target. The firm says its bullish view reflects Square's improving execution, marked by simpler merchant onboarding and new vertical solutions, such as in hospitality, and CEO Jack Dorsey "injecting new energy into a business that had become complacent, despite technology leadership."

In addition to streamlined merchant onboarding, Square has consolidated apps, and has made it easier for merchants to accept payments through the introduction of capabilities like Tap-to-Pay on iPhone, William Blair tells investors in a research note.

The firm believes Block's strong operating leverage will continue, and sees optionality in potential Square distribution deals. The stock should rerate higher as the Street gains comfort with the company's ability to achieve its "Rule-of-40 goal," contends Blair.

3. BofA says Shopify "Turned a Corner," Upgrades to Buy

BofA upgraded Shopify (SHOP) to Buy from Neutral with a price target of $82, up from $78. Following years of declining margin, the firm believes the company has turned a corner on balanced growth and margin under new CFO Jeff Hoffmeister. BofA forecasts "solid" revenue growth and free cash flow conversion, driven by high single-digit baseline e-commerce growth, steady share gains, and disciplined spending.

4. Datadog Upgraded to Outperform at Mizuho

Mizuho upgraded Datadog (DDOG) to Outperform from Neutral with a price target of $155, up from $135. The company appears to be "solidifying its position as a clear leader in the observability market with multiple product areas at scale and newer products growing rapidly," the firm tells investors in a research note.

In addition, Mizuho's recent channel checks were "clearly better than expected," including some larger transactions and greater evidence of vendor consolidation. As a result, the firm thinks Datadog has an opportunity to show meaningful revenue upside to the Street's Q2 estimate, and continues to view the company's 2024 revenue guide as conservative.

Datadog Initiated With an Outperform at Evercore ISI

Additionally, Evercore ISI initiated coverage of Datadog with an Outperform rating and a price target of $150. After "treading water" for two years, Datadog has matured to a point and grown into its valuation so that it can become a more consistent compounder over the next 12-24 months, the firm tells investors in a research note.

Evercore ISI does not see the company's Q2 results being a big catalyst for the stock, but when taking a view to the second half of 2024 and beyond, it believes the stock's risk/reward skews to the upside based on the potential for upside to estimates, the continued expansion of Datadog's total addressable market, and optionality around its new artificial intelligence offerings.

5. SentinelOne Initiated With an Outperform at Baird

Baird initiated coverage of SentinelOne (S) with an Outperform rating and a $25 price target. Despite a slight fiscal 2025 guidance down-revision, SentinelOne maintains a strong growth trajectory, the firm tells investors in a research note. Baird believes the company poised for continued growth and profitability with platform fueling 40% of Q1 bookings, as well as cloud/data driving cross-selling opportunities.

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

1. Foot Locker Downgraded to Underweight at Morgan Stanley

Morgan Stanley downgraded Foot Locker (FL) to Underweight from Equal Weight with a price target of $18, down from $24. The firm cites negative indicators in its scorecard analysis, continued fear of negative earnings revision risk both near- and long-term, and risk of valuation de-rating for the downgrade.

The analysis shows that Foot Locker faces the greatest risk to consensus estimates in the second half of 2024, as consensus forecasts embed outsized second half sales and profitability concentration versus what history would suggest, Morgan Stanley tells investors in a research note.

2. CrowdStrike Downgraded to Sell from Buy at Redburn Atlantic

Redburn Atlantic double downgraded CrowdStrike (CRWD) to Sell from Buy with a price target of $275, down from $380. The stock's valuation is "demanding," and any disappointment to sales or annual recurring revenue could bring a sharp de-rating, the firm tells investors in a research note.

Redburn sees downside risk to current buy-side expectations. CrowdStrike's consensus growth expectations do not reflect early indicators of a slowdown, contends the firm.

3. Molson Coors Downgraded to Underweight at Barclays

Barclays downgraded Molson Coors (TAP) to Underweight from Equal Weight with a price target of $47, down from $55. The firm believes a challenging industry backdrop will weigh on Molson's results "for some time."

Consensus estimates are yet to reflect the softer than originally anticipated U.S. beer category performance in 2024, Barclays tells investors in a research note. The firm sees "noise" from the company lapping the Bud Light controversy, and expects management's medium-term profit growth goals will "prove illusive."

4. Choice Hotels, Host Hotels Downgraded to Underweight at JPMorgan

JPMorgan downgraded Choice Hotels (CHH) to Underweight from Neutral with an unchanged price target of $120. The analyst views the stock's valuation versus Wyndham Hotels (WH) as full following the recent rally. This "makes little sense" given Choice's less net rooms growth versus Wyndham, the analyst tells investors in a research note.

Choice's Q2 sequential quarterly planned development pipeline declined, says JPMorgan, which prefers to own Wyndham for its "superior growth and more appealing valuation prospects."

In addition, JPMorgan downgraded Host Hotels (HST) to Underweight from Neutral with a price target of $18, down from $20. Host shares trade near its historical valuation average despite the risk of execution from its recently transformed portfolio, the firm tells investors in a research note. The firm says it could envision becoming more positive on the stock at lower share price levels.

5. Spirit Airlines Downgraded to Sell at TD Cowen on Downside Risk to Estimates

TD Cowen downgraded Spirit Airlines (SAVE) to Sell from Hold with a $2 price target. Given oversupply in leisure markets, weakness among lower income cohorts, and "myriad constraints on utilization," the firm believes there is still much downside risk to estimates.

While there should be a resolution to Spirit's creditor negotiations soon with some scenarios less negative than others, TD Cowen says it does not forecast a quarterly operating profit until summer 2026.

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