Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
Consensus Price Target: $21.50 (38.4% implied return)
Powering communications for tech giants like Microsoft, Google, and Zoom, Bandwidth (NASDAQ:BAND) provides cloud-based communications software and APIs that enable businesses to embed voice, messaging, and emergency services into their applications and platforms.
Why Are We Wary of BAND?
Sales trends were unexciting over the last two years as its 13.4% annual growth was below the typical software company
Estimated sales growth of 4.9% for the next 12 months implies demand will slow from its two-year trend
Gross margin of 38.6% is way below its competitors, leaving less money to invest in areas like marketing and R&D
Bandwidth’s stock price of $15.53 implies a valuation ratio of 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why BAND doesn’t pass our bar.
Consensus Price Target: $26.79 (28.3% implied return)
Credited for inventing the first pair of blue jeans in 1873, Levi’s (NYSE:LEVI) is an apparel company renowned for its iconic denim products and classic American style.
Why Should You Dump LEVI?
Weak constant currency growth over the past two years indicates challenges in maintaining its market share
Projected sales growth of 3.1% for the next 12 months suggests sluggish demand
Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $20.87 per share, Levi’s trades at 15x forward P/E. Read our free research report to see why you should think twice about including LEVI in your portfolio, it’s free for active Edge members.
Consensus Price Target: $96.24 (73.5% implied return)
Founded by a husband and wife duo, U-Haul (NYSE:UHAL) is a provider of rental trucks and storage facilities.
Why Do We Think UHAL Will Underperform?
Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
