American downgraded, United upgraded: Wall Street’s top analyst calls

The most talked about and market moving research calls around Wall Street are now in one place. Here are today’s research calls that investors need to know, as compiled by The Fly.

Top 5 Upgrades:

• 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.
• Argus upgraded Berkshire Hathaway (BRK.B) to Buy from Hold with a $450 price target. The firm, which has a positive view of the conglomerate nature of Berkshire and notes the stock returns have doubled those of the S&P 500 since 1965, points out that the stock is currently trading at 21-times the firm’s 2024 operating EPS forecast, below the current S&P 500 multiple of 24-times.
• Truist upgraded Norwegian Cruise Line (NCLH) to Buy from Hold with a price target of $21, up from $20. Overall booking and pricing trends for cruises continue to look encouraging with the greatest opportunity for potential 2024 earnings upside continuing to come from elevated pricing on near-in bookings given the limited inventory left to sell for 2024, the firm tells investors in a research note.
• BofA upgraded Melco Resorts (MLCO) to Buy from Neutral with a price target of $10.40, up from $7.50. The company’s investment in customer services since the start of 2024 is paying off, the firm says.
• Citi upgraded Liberty Energy (LBRT) to Buy from Neutral with a price target of $32, up from $24. Liberty has been an outperformer within oilfield services over the past year as fears toward margin compression proved overblown, but the stock’s 2025 EBITDA multiple still fails to fully capture an improving outlook, the firm argues.

Top 5 Downgrades:

• Jefferies downgraded American Airlines (AAL) to Hold from Buy with a price target of $12, down from $17. The firm says the company’s guidance “held on as long as it could,” but it’s clear its long-term strategy will take some time to execute, particularly in light of its 18% Q2 earnings outlook cut and chief commercial officer departure. Seaport Research also downgraded American Airlines to Neutral from Buy with no price target.
• Baird downgraded Grainger (GWW) to Neutral from Outperform with a price target of $975, down from $1,000. The firm cites valuation for the downgrade with the shares near the price target. Baird also downgraded MSC Industrial (MSM) and Wesco (WCC) to Neutral from Outperform.
• BMO Capital downgraded CubeSmart (CUBE) to Market Perform from Outperform with a price target of $47, down from $50. The firm is taking a more cautious stance on storage fundamentals, seeing downside risk to the overall sector and CubeSmart’s same store guidance with Q2 results.
• Citi double downgraded Bank OZK (OZK) to Sell from Buy with a price target of $37, down from $57. The firm has “newfound, but substantial concerns” with what it believes to be OZK’s largest individual loan totaling $915M, 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.
• Truist downgraded Independent Bank (IBTX) to Hold from Buy with a price target of $50, up from $46, following the announced merger agreement with South State (SSB). The firm believes this is “a sensible deal on paper” and thinks this acquisition also solves Independent’s CRE concentration issue.

Top 5 Initiations:

• TD Cowen initiated coverage of Medpace (MEDP) with a Buy rating and $452 price target. The firm believes Medpace will continue to see “outsized growth” relative to its contract research organization peers through continued market share gains and exposure to biotech clinical development, which is expected to outpace large pharma over the long-term. Medpace’s strong balance sheet and free cash flow generation also provides for potential upside through share repurchases.
• TD Cowen initiated coverage of Fortrea Holdings (FTRE) with a Hold rating and $27 price target. Fortrea has a “solid foundation for the long term” and “significant untapped earnings power” of $4-$5 per share, but the firm sees multiple factors near-to-medium term that may limit meeting growth and margin expansion targets.
• Citi initiated coverage of Sage Therapeutics (SAGE) with a Sell rating and $8 price target. 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. Baird also started coverage of Sage Therapeutics with a Neutral rating and $15 price target.
• William Blair resumed coverage of RBC Bearings (RBC) with an Outperform rating and fair value estimate of $320 per share. RBC stands out as the premier supplier of highly engineered bearings, gears, and drives, benefiting from “robust tailwinds,” including government stimulus, reshoring, and ramping production across aerospace and defense, the firm tells investors in a research note.
• Noble Capital initiated coverage of Resources Connection (RGP) with an Outperform rating and $15 price target. Resources Connection, a global consulting firm focused on project execution services, is well capitalized to fund growth, both organic and inorganic, and make necessary investments while also having a history of returning excess capital to shareholders, the firm tells investors.