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 week of May 27 through June 2, 2024. First, here are the top 5 buy calls of the week.

1. Wedbush Upgrades Airbnb to Outperform on Resilient Travel Demand

Wedbush upgraded Airbnb (ABNB) to Outperform from Neutral with a price target of $165, up from $160. The stock is down 8.5% since the company reported Q1 earnings on May 8, and investors should take advantage of this period of relative weakness, the firm tells investors in a research note.

Wedbush sees potential upside to near-term estimates following the "disappointing" guidance, as it believes travel demand continues to be resilient. Longer-term, Airbnb's underlying growth opportunity remains attractive, and there is "significant optionality" ahead as the company expands beyond the core business, contends the firm.

Airbnb continues to hold a leading competitive position within the alternative accommodation segment, and its opportunity for growth in adjacent products and services is becoming more tangible as management's focus shifts to new areas of growth, says Wedbush.

2. PayPal Upgraded to Buy at Mizuho

Mizuho upgraded PayPal (PYPL) to Buy from Neutral with a price target of $90, up from $68. The firm's analysis of PayPal's newly introduced Fastlane product shows potential for $1.0 billion - $1.5 billion transaction margin dollar lift over the medium-term, given the $1.43 trillion of annual e-commerce spend that is addressable.

Mizuho is also encouraged by stabilization in PayPal's Branded Checkout trends. The firm views the stock's valuation as compelling, noting PayPal trades greater than one standard deviation below its historical level relative to peers.

3. United Airlines Upgraded to Buy at Jefferies on Free Cash Flow Generation

Jefferies upgraded United Airlines (UAL) to Buy from Hold with a price target of $65, up from $54. United has invested heavily in the domestic product over the pandemic, and the product offering is succeeding across premium to economy cabin, the firm tells investors.

Meanwhile, advantaged by its coastal hubs and retainment of all 220 widebodies over the pandemic, United's international margins are materially ahead of domestic, and peak profit fears "seem off the table," Jefferies added. The firm sees a pathway to higher margins and forecasts United to generate $5 billion of free cash flow to 2026, despite $22 billion of capex for 269 aircrafts.

4.  Datadog Upgraded to Buy at BofA

BofA upgraded Datadog (DDOG) to Buy from Neutral with a price target of $155, up from $143. The company is establishing itself as the "next high quality large cap stock" in software, the firm tells investors in a research note. BofA says Datadog has a "robust" platform with 22 products, and its value proposition is attractive for spend consolidators. It sees the company consistently delivering a "rule-of-40+" profile.

5. Okta Upgraded to Outperform at Evercore ISI

Evercore ISI upgraded Okta (OKTA) to Outperform from In Line with a price target of $122, up from $102. The company reported strong Q1 results that exceeded tempered expectations, accompanied by a "much more upbeat tone," suggesting that prior missteps and execution issues are now behind Okta, the firm tells investors in a research note.

Evercore is encouraged by what it is seeing, saying its positive outlook on the shares is driven by favorable sentiment from the channel as well as encouraging discussions with customers and employees.

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

1. Guggenheim Downgrades Generac to Sell on Lack of Estimate Upside

Guggenheim downgraded Generac (GNRC) to Sell from Neutral with a price target of $120. The firm believes an active hurricane season is "already in the numbers." It is hard to see upside potential to the current 2024 estimates, Guggenheim tells investors in a research note.

The firm also sees a challenged outlook in Generac's residential solar energy and energy storage business. It cites valuation and the company's slowing growth for the downgrade.

2. FactSet Downgraded to Underperform at BofA

BofA downgraded FactSet (FDS) to Underperform from Neutral with a price target of $407, down from $500. The firm believes the company's annual subscription value and revenue "will remain stuck in a multi-quarter rut" amid an uncertain operating environment and sluggish capital markets activity.

This is leading to delayed customer decision making and much slower closing of large deals, BofA tells investors in a research note. The firm sees downside risk to FactSet's valuation as sales remain pressured near-term.

3. Medtronic Initiated with a Sell at Goldman Sachs

Goldman Sachs initiated coverage of Medtronic (MDT) with a Sell rating and a price target of $83.

While the company is demonstrating consistency in its revenue growth, there is downside to Street earnings estimates due to the need to reinvest in the business to support growth amid stable end markets and relatively competitive industry dynamics, the firm tells investors in a research note. Goldman says Medtronic's peers have been significantly increasing investments in the highest growth segments of the market.

4. Bank OZK Downgraded to Sell from Buy at Citi

Citi double downgraded Bank OZK (OZK) to Sell from Buy with a price target of $37, down from $57. Bank OZK has been instrumental in the development of high-dollar commercial real estate projects throughout the U.S. for multiple decades, the firm tells investors in a research note.

However, Citi has "newfound, but substantial concerns" with what it believes to be OZK's largest individual loan totaling $915 million, a multi-use project in Atlanta, and life science construction lending in general, which it says is largely idiosyncratic to OZK versus its peer banks. When thinking about a share price valuation, the firm juxtaposed the bank's healthy pre-provision net revenue outlook against its tightening capital levels and compounding credit concerns.

5. Sage Therapeutics Initiated with a Sell at Citi

Citi initiated coverage of Sage Therapeutics (SAGE) with a Sell rating and a price target of $8.

The stock's 45% year-to-date decline and a 75% decline since the FDA Complete Response Letter for zuranolone makes it look like a buying opportunity, but with upcoming binary catalysts and a commercial launch that could disappoint, there may be further downside ahead given the high cash burn that may lead to Sage Therapeutics being valued up to 50% below cash, the firm tells investors in a research note.

More By This Author:

Here's What Wall Street Experts Are Saying About Salesforce (CRM) Ahead Of Earnings
Wall Street's Top 10 Stock Calls This Week - Saturday, May 25
Here's What Wall Street Experts Are Saying About Nvidia Ahead Of Earnings