Wall Street's Top 10 Stock Calls This Week - Saturday, March 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 trading week of March 11-15, 2024. First, here are the top 5 buy calls of the week.

1. Disney Initiated with a Buy at CMB International

CMB International initiated coverage of Disney (DIS) with a Buy rating and a price target of $142. The firm told investors that it expects Disney to benefit from streaming and sports industry tailwinds along with its cost control initiatives.

2. Argus Upgrades Oracle to Buy amid Growing Cloud Revenue

Argus upgraded Oracle (ORCL) to Buy from Hold with a price target of $145 after its Q3 earnings beat. The quarter marked the first time when rapidly growing cloud revenue crossed over to become a higher proportion of revenue than the company's legacy license support revenue, the firm tells investors in a research note.

Oracle has the "high class issue" of demand outstripping its ability to service that demand, and as the company continues to invest in building out its global data centers to meet that demand, the management has reflected about the upcoming revenue acceleration into FY25, Argus says.

Oracle Upgraded to Outperform at William Blair amid "Structural Shift" 

Additionally, William Blair upgraded Oracle to Outperform from Market Perform without a price target. Oracle reported a solid Q4 with management confidently reiterating its fiscal 2026 guidance for $65 billion in revenue and 45%-plus non-GAAP operating margins and indicating potential for upside to these targets, the firm tells investors in a research note.

William Blair says the positive demand commentary and strong bookings growth "undergird the structural shift at Oracle that positions the company well for a sustained acceleration in topline growth." The firm sees sustained growth acceleration for Oracle led by artificial intelligence and the company's "differentiated" cloud offerings.

3. Robinhood Initiated with an Outperform at Bernstein

Bernstein initiated coverage of Robinhood (HOOD) with an Outperform rating and a $30 price target, which represents 83% upside. The "buy-side and sell-side alike refuse to see what we see," namely a "monster of a crypto cycle over 2024-25," the firm tells investors. Bernstein expects the crypto market cap to reach $7.5 trillion versus $2.6 trillion, where it stands today.

4. Texas Roadhouse Upgraded to Outperform at Baird

Baird upgraded Texas Roadhouse (TXRH) to Outperform from Neutral with a price target of $175, up from $160. The shares "still may have plenty of room to run" even when factoring in the recent strength, the firm tells investors in a research note.

Baird believes "continued signs of standout same-store traffic performance," along with progress on improving profitability in 2024 will help to support positive investor sentiment and premium valuation metrics on Texas Roadhouse, allowing the stock to work higher over the next 12 months as the earnings base rises.

5. Rivian Automotive Upgraded to Overweight at Piper after R2 Unveiling

Piper Sandler upgraded Rivian Automotive (RIVN) to Overweight from Neutral with a price target of $21, up from $15. After watching last week's live stream, re-assessing the capex outlook, and considering the post-Q4 selloff, the firm says it feels "compelled to upgrade" the stock, but adds: "Make no mistake: buying RIVN is risky and a botched midyear re-tooling effort could yet surprise investors negatively."

However, the newly-unveiled R2 SUV generated 68,000 orders in less than 24 hours, and the firm thinks its sibling R3 "could be one of the most compelling designs on the market when it is released." Excitement around new products, coupled with a plan to delay capex and build R2 in an existing plant, should prompt investors to "adopt a more bullish stance," the firm argues.

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

1. Wells Downgrades Tesla to Sell on Price, Demand, Valuation Concerns

Wells Fargo downgraded Tesla (TSLA) to Underweight from Equal Weight with a price target of $125, down from $200. Underweight is the firm's equivalent of a sell rating. Wells expects the company's volume to disappoint as price cuts are having a diminishing impact on demand. Lower deliveries and prices drive the firm's 2024 earnings estimate to 32% below consensus.

Tesla's price-to-earnings premium valuation versus the "Magnificent 7" is likely at risk, Wells tells investors in a research note. The firm believes headwinds from disappointing deliveries and more price cuts from Tesla will likely drive negative earnings revisions.

It further thinks Model 2 economics "are likely tough" as a mass market compact vehicle. Tesla already trades at 58-times consensus 2024 earnings and 89-times Wells' estimate, a premium to its Magnificent 7 peers trading at 31-times, contends the firm.

2. Under Armour Downgraded to Underperform at Evercore ISI

Evercore ISI downgraded Under Armour (UA) to Underperform from In Line with a price target of $7, down from $8, after the company announced that founder Kevin Plank will return as CEO, replacing Stephanie Linnartz, who joined last February. Plank's return is a "clear signal" that Under Armour's strategy isn't working and supports the firm's field work showing key performance indicators continue to deteriorate in the current quarter, the firm tells investors.

Evercore also thinks the most likely scenario Plank will pursue will include efforts to accelerate a return to North American revenue growth, which it thinks will add significant longer-term risk to the brand.

3. Merck Downgraded to Sell at Societe Generale

Societe Generale downgraded Merck (MRK) to Sell from Hold with a price target of $104. The firm notes that its estimates are "well below consensus," and it thinks the valuation isn't sufficiently discounting the Keytruda patent expiry.

4. Latham Group Double Downgraded to Underperform at BofA

BofA downgraded Latham Group (SWIM) to Underperform from Buy with a price target of $2.60, down from $4.50, after the company initiated 2024 guidance with the midpoint of revenue and adjusted EBITDA about 8% and 35%, respectively, below the firm's prior expectations. The firm cites the softer than expected start to 2024, lower expectations for new pool construction, and limited free cash flow generation for its downgrade.

5. Brown & Brown Downgraded to Underperform at BofA

BofA downgraded Brown & Brown (BRO) to Underperform from Neutral with a price target of $86, up from $80. Shares have increased 14% versus large-cap broker peers and the S&P 500, both being up 7% since the company reported earnings on Jan. 22, the firm tells investors. BofA argues that the stock's rapid rise has stretched valuation.

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