Notable analyst calls this week: Nvidia, Spirit Airlines and PayPal among top picks

The S&P500 (SP500) closed in the green on Friday, after an eventful week that saw the arrival of fresh economic data supporting the easing of monetary policy.

Besides focusing on the Fed’s monetary policy committee meeting, market participants also digested comments from Fed chair Jerome Powell.

For the week, the tech-heavy Nasdaq (COMP:IND) gained 1.7%, while blue-chip Dow (DJI) advanced 0.4%.

Wall Street had a slew of upgrades and downgrades from analysts. Here are some of the major calls for the week:

Spirit Airlines and Frontier’s ‘clear as mud’ outlook setup concerns Raymond James

Raymond James downgraded Spirit Airlines (NYSE:SAVE) and Frontier Group Holdings (NASDAQ:ULCC) to Underperform from Market Perform, with the brokerage saying that it sees the setup into Q3 outlook for both carriers “clear as mud” due to rapid market and product modifications, potential headwinds from softer consumer trends, Paris Olympics, and a “pre-election corporate travel impact.”

Raymond James’ Savanthi Syth says weak fare trend also possess a challenge, adding that she views legacy carriers Delta Air Lines (NYSE:DAL) and United Airlines (NASDAQ:UAL) starting to experience some “chop” even as they are able to fly above much of the “industry turbulence.”

Nvidia in focus on getting rare downgrade from New Street Research

AI darling Nvidia (NASDAQ:NVDA) was downgraded by to Neutral from Buy by New Street Research and set a 12-month price target of $135, citing limited further upside.

“We downgrade the stock to Neutral today, as upside will only materialize in a bull case, in which the outlook beyond 2025 increases materially, and we do not have the conviction on this scenario playing out yet,” wrote New Street analyst Pierre Ferragu.

However, the London-based investment firm added that the quality of the franchise is nevertheless intact, and it would be buyers again, but only on prolonged weakness.

Atlassian’s ‘attractive entry point’ impresses Piper; CrowdStrike ‘less favorable’ risk reward drives downgrade

Piper Sandler upgraded Atlassian (NASDAQ:TEAM) to Overweight from Neutral, saying that the current valuation of the project management software company creates a compelling entry point. The brokerage also hiked PT by $25 to $225.

“The current valuation as an attractive entry point into what we view as one of the most durable companies in our coverage,” said Piper analyst Rob Owens. Atlassian lost over 20% so far this year.

Meanwhile, Owens downgraded CrowdStrike (NASDAQ:CRWD) to Neutral from Overweight, citing high valuation and “less favorable” risk reward.

“We are optimistic about the company longer term as well as the opportunity, just not the stock over our 12-month investment horizon,” wrote Owens.

Citi not confident on summer housing activities

Citi downgraded home builders Lennar (NYSE:LEN) and D.R. Horton (NYSE:DHI) to Neutral from Buy on softening housing activity this summer. The brokerage also slashed LEN’s PT from $174 to $164, while for DHI, it was cut to $156 from $18, saying it sees limited near-term catalysts for the stock until ’25.

NextEra Partners downgraded on dividend doubt

NextEra Energy Partners (NYSE:NEP) was downgraded to Sector Perform from Outperform with a $30 price target, cut from $38, anticipating a challenging road ahead with insufficient growth from wind repowering.

RBC analyst Shelby Tucker believes NextEra will not be able to sustain long-term 5%-8% dividend/unit growth.

Susquehanna positive on PayPal’s profitable growth

Susquehanna upgraded PayPal (NASDAQ:PYPL) to Positive from Neutral, saying that it is positive on the payments company making profitable growth a top priority.

The brokerage considers the recent significant fall in the stock price for the ratings action. PayPal, which saw a significant dip after in value after Apple unveiled new products and features, has lost over 2% so far this year.

“Consumer-facing improvements should increase value proposition for branded checkout,” pointed out Susquehanna analyst James Friedman and set PT of $71 on the stock.

Raymond James bullish on Meta’s GenAI monetization; Needham, however, has few concerns

Raymond James reiterated its Strong Buy rating on Meta Platforms (NASDAQ:META) and raised the price target on the shares to $600 from $550, reflecting their bullish stance on GenAI monetization across Llama and consumer/business ad opportunities on the platform.

However, the brokerage lowered its 2025 earnings estimate by 3% to $24.26 steered mainly by higher infrastructure costs.

Separately, Needham analysts are worried that Meta’s growing investments in LLMs and in the Metaverse in the near term will lower its return on invested capital, or ROIC, and recommended investors use Meta as a source of funds.

Needham, which has an Underperform rating on the stock, added it is concerned that that expenses and capex estimates will increase faster than consensus estimates during 2024.

Other than the companies mentioned above, some other notable analyst actions included Adobe (NASDAQ:ADBE) joining to Mizuho’s monthly compilation of top picks, with analyst Gregg Moskowitz suggesting that the breadth of Adobe’s AI monetization is “being underappreciated” by Wall Street, and it should become more apparent in H2 2024.

Wells Fargo added Tesla (NASDAQ:TSLA) to its Q3 Tactical Ideas List and said the stock might see a near-term decline. Analyst Colin Langan maintained an Underweight rating on the EV firm and pointed towards the expectation for declining delivery growth driven by lower demand and diminished returns on price cuts.

BMO Capital Markets downgraded drugmaker Incyte (NASDAQ:INCY) to underperform from market perform, citing the potential consequences of the company’s recently announced $2B share buybacks.