This week, Wall Street analysts issued a spate of notable changes in their stock ratings while the market tumbled and surged due to the release of key economic indicators. The S&P 500 (Standard and Poor’s 500) closed in positive territory Friday, concluding an action-packed week full of fresh economic data that also substantiated views to decrease monetary policy.
Market Performance
The tech-heavy Nasdaq gained the most, 1.7%, for the week, while the blue-chip Dow Jones Industrial Average lagged behind, up only 0.4%. Investors have concentrated intensely on the meeting held by the Federal Reserve’s monetary policy committee and comments from Fed Chair Jerome Powell.
Turbulent Airline Sector
The airline sector was all abuzz about Raymond James’ downgrade of both Spirit Airlines (NYSE: SAVE) and Frontier Group Holdings (NASDAQ: ULCC) to Underperform from Market Perform. As pointed out by the analyst Savanthi Syth, “the outlook for Q3 remains clear as mud,” given the pace of changes in markets and products, probably with headwinds from softer consumer trends, the Paris Olympics, and the pre-election dynamic hitting business travel. He also noted that even the industry leaders, Delta Air Lines, are starting to show some cracks, though mostly they have been able to work through most of the “industry turbulence.”
Rare Downgrade Strikes Nvidia
AI powerhouse Nvidia took down a notch to Neutral from Buy by New Street Research, with a 12-month price target of $135. 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,” said analyst Pierre Ferragu. Despite that downgrade, New Street reported that Nvidia’s quality in its franchise remained intact.
Software Sector Shuffles
Piper Sandler made some noteworthy changes in the software space. The firm upgraded Atlassian NASDAQ to Overweight from Neutral and increased the price target to $225. According to analyst Rob Owens, the current valuation offers “an attractive entry point into what we view as one of the most durable companies in our coverage.” On the other hand, Piper downgraded CrowdStrike NASDAQ to Neutral from Overweight owing to high valuation and “less favorable” risk-reward dynamics.
Housing Market Concerns
Citi said it was cautious on the housing market, cutting home builders Lennar and D.R. Horton to Neutral from Buy. The brokerage cut Lennar’s price target from $174 to $164 and reduced D.R. Horton’s target from $166 to $156, citing expectations for softening housing activity this summer and limited near-term catalysts.
Adjustment in the Energy Sector
NextEra Energy Partners NYSE: NEP was downgraded by RBC Capital Markets to Sector Perform from Outperform, taking the price target down from $38 projections to $30. Shelby Tucker, of the same firm, was less upbeat about whether NextEra would be able to drive long-term 5%-8% dividend/unit growth, indicating that headwinds would be ahead on account of lack of enough growth from wind repowering.
PayPal’s Potential Turnaround
Susquehanna upgraded PayPal [NASDAQ:PYPL] from Neutral to Positive, setting a price target of $71. Analyst James Friedman traversed toward this by citing profitable growth focus, citing that “Consumer-facing improvements should increase value proposition for branded checkout.” Thus, as PayPal had lost greater than 2% year-to-date, the upgrades probably wouldn’t be so off-hand.
Meta’s AI Prospects and Concerns
Raymond James emphasized its Strong Buy rating on Meta Platforms (NASDAQ:META) also raising the share’s price target from $550 to $600. The firm was positive about the monetizing potential of Meta AI across Llama and consumer/business ad opportunities. They, however, lowered their 2025 earnings estimate by 3% to $24.26, primarily due to the assumption that infrastructure costs will be higher. In contrast, Needham still maintained an Underperform rating on Meta, citing concerns that growing investments in LLMs and Metaverse might lower the return on invested capital.
Other notable calls:
NASDAQ: was added to Mizuho’s monthly top picks list, as analyst Gregg Moskowitz pointed out Wall Street may be underappreciating the breadth of Adobe’s AI monetization potential.
Wells Fargo added Tesla to its Q3 Tactical Ideas List while keeping its Underweight rating, pointing to the near-term decline in delivery growth.
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BMO Capital Markets downgrades shares of drugmaker Incyte Corp to Underperform from Market Perform and claims concerns over INCY’s recently announced share buyback program pegged at $2 billion.
These varied analyst calls are indicative of the complicated and quickly changing landscape for markets, where modernizing technology, shifting consumer behavior, and economic conditions keep driving reappraisals across multiple sectors. Investors are expected to keep a close watch on these expert opinions as they attempt to thread their way through a difficult investment landscape.