Image Source: Pixabay

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 1-5, 2024. First, here are the top 5 buy calls of the week.

1. PayPal Upgraded to Positive on Recent Selloff at Susquehanna

Susquehanna upgraded PayPal (PYPL) to Positive from Neutral with an unchanged price target of $71. The firm cites valuation for the upgrade following the stock's significant recent decline. PayPal's consumer-facing improvements should increase its value proposition for branded checkout, Susquehanna tells investors in a research note. The firm says the company is making "profitable growth" a top priority.

2. Intuit Initiated With an Outperform at RBC Capital

RBC Capital initiated coverage of Intuit (INTU) with an Outperform rating and a $760 price target. The firm likes Intuit's "successful transition" to a subscription model and its market leadership position in tax and accounting software.

RBC sees a "major opportunity" for Intuit in generative artificial intelligence, especially because tax preparation and small business accounting are "very services-heavy industries and Intuit has an opportunity to help." The company also continues to expand margins, the firm adds.

3. UBS Upgrades Birkenstock to Buy on Direct-To-Consumer Expansion

UBS upgraded Birkenstock (BIRK) to Buy from Neutral with a price target of $85, up from $52. The company is successfully executing its direct-to-consumer expansion strategy better than expected, the firm tells investors in a research note.

UBS sees Birkenstock "ramping rapidly" in Asia-Pacific and selling prices moving higher than previously thought, driven by a positive sales mix shift to direct-to-consumer and successful introductions of premium priced products in new categories. The firm increased its five-year annual earnings growth forecast to 25% from 21%, and its new fiscal 2026 earnings estimate is now 10% above consensus.

UBS thinks continued strong growth and upward earnings revisions will boost the stock's valuation toward its price target. It sees a 3:1 upside/downside skew.

Birkenstock Resumed With a Buy at Citi

Citi resumed coverage of Birkenstock with a Buy rating and a $65 price target. The company's recent secondary offering was for 14 million shares with a green shoe of an additional 2.1 million, all from L Catterton, which owned 81% of total shares before the offering and now holds 73%, the firm tells investors in a research note.

Citi says Birkenstock executives that sold shares did so largely for tax reasons, according to a company filing, and the shares sold represented 60% of what they owned.

4. Seaport Upgrades Bank of America to Buy on "Inexpensive" Valuation

Seaport Research upgraded Bank of America (BAC) to Buy from Neutral with a $48 price target. The firm says recent management guidance implies turnover across the bank's loan book is improving, with potential further upside as cash flow hedges on commercial and industrial loans mature.

Meanwhile, industry deposit growth is coming in better than expected, and the "higher-for-longer" interest rate environment buys more time for Bank of America to re-price assets at higher rates and return to balance sheet growth, Seaport tells investors in a research note. With further net interest income tailwinds in 2026 and beyond and a "still inexpensive" multiple, the stock is attractively valued, contends the firm.

5. Atlassian Upgraded to Overweight from Neutral at Piper Sandler

Piper Sandler upgraded Atlassian (TEAM) to Overweight from Neutral with a price target of $225, up from $200. With the shares sliding to eight-times estimated 2025 revenue, Atlassian's risk/reward has turned favorable, the firm tells investors in a research note.

For a company that should end this fiscal year at a "Rule of 52" with line of sight into a sustainable "Rule of 50" profile going forward, the current valuation does not reflect "this durable fundamental profile," contends Piper. The firm thinks enterprise customers "will power the next wave of cloud migrations, lending to better cloud growth dynamics."

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

1. Charter Initiated With a Sell at Goldman Sachs

Goldman Sachs initiated coverage of Charter (CHTR) with a Sell rating and a $250 price target. The U.S. telecom industry is in a state of transformation and telecom operators have refocused on their core business after having emerged from a period as conglomerates marked by shareholder capital destruction, Goldman tells investors in a research note.

For the first time in a decade, the firm sees the U.S. wireless operators entering a period where both competitive intensity and capital intensity are moderating simultaneously. It sees this backdrop driving healthier growth and margin dynamics, with potential for significant capital returns and stock re-rating.

U.S. towers are unlikely to enjoy the same structural tailwinds they have over the past decade - but "self-help" actions could unlock shareholder value, according to the firm.

Charter Downgraded to Sell from Neutral at Citi

Citi downgraded Charter to Sell from Neutral with a price target of $255, down from $280. The company faces risks to both consensus estimates and to valuation as the organic broadband environment is getting "tougher" relative to expectations, the firm tells investors in a research note.

The discontinuation of ACP, or Affordable Connectivity Program, is also likely to exacerbate broadband subscriber and revenue headwinds over the next 12 months, with consensus 2025 EBITDA expectations now looking "too optimistic," Citi added.

2. Citi Double Downgrades Shoals to Sell Ahead of Patent Ruling

Citi double downgraded Shoals Technologies (SHLS) to Sell from Buy with a price target of $5, down from $15, after analyzing potential outcomes ahead of the forthcoming initial determination of the company's patent infringement case against Voltage. The infringement case has an initial determination slated for around July 12.

The Commission Investigative Staff opinion on the case "skews the odds meaningfully against" Shoals, the firm tells investors in a research note. Citi says that assuming no violation is found, increased competition should pressure the company's gross margin into the mid-20% range, in line with tracker margins. The stock should trade at a 6%-8% free cash flow yield, which is in-line with Citi's updated $5 target, the firm adds.

3. Pure Storage Downgraded to Sell at UBS

UBS downgraded Pure Storage (PSTG) to Sell from Neutral with a price target of $47, up from $44. The firm sees an unfavorable risk/reward for the shares given the company's slowing growth and declining market share. 

UBS says Pure Storage is getting too much credit for artificial intelligence with an "elevated valuation." AI-related storage spending will likely be slower than the market expects, contends UBS.

4. CS Disco Downgraded to Underweight at JPMorgan

JPMorgan downgraded CS Disco (LAW) to Underweight from Neutral with a price target of $5, down from $8. The firm sees a "challenging setup with multiple headwinds ahead." The company's fundamentals have been deteriorating since the ex-CEO and Founder's exit in September 2023, JPMorgan tells investors in a research note.

The firm says that new leadership is driving focus toward improving sales execution and rebuilding client success teams, while the combination of decelerating growth, lack of profitability, cash burn, and elevated execution risk point to an unfavorable risk/reward for the shares.

5. Spirit Airlines, Frontier Group Downgraded to Underperform at Raymond James

Raymond James downgraded Spirit Airlines (SAVE) to Underperform from Market Perform without a price target. The downgrade reflects a slightly lower fuel outlook and weaker fare trends, the analyst tells investors in a research note.

The firm says the budget airline setup into Q3 is "clear as mud." Raymond James also downgraded Frontier Group (ULCC) to Underperform from Market Perform without a price target. The risks are greatest at Frontier and Spirit despite the "already weak share price and investor sentiment," adds Raymond James.

More By This Author: