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When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock poised to prove Wall Street wrong and two where the outlook is warranted.

Two Stocks to Sell:

Playa Hotels & Resorts (PLYA)

Consensus Price Target: $13.46 (0.2% implied return)

Sporting a roster of beachfront properties, Playa Hotels & Resorts (NASDAQ:PLYA) is an owner, operator, and developer of all-inclusive resorts in prime vacation destinations.

Why Are We Cautious About PLYA?

1. Softer revenue per room over the past two years suggests it might have to invest in new amenities such as restaurants and bars to attract customers

2. Estimated sales decline of 2.6% for the next 12 months implies an even more challenging demand environment

3. ROIC of 4.4% reflects management’s challenges in identifying attractive investment opportunities

Playa Hotels & Resorts is trading at $13.43 per share, or 21.6x forward P/E. Read our free research report to see why you should think twice about including PLYA in your portfolio, it’s free.

3M (MMM)

Consensus Price Target: $148.20 (5.1% implied return)

Producers of the first asthma inhaler, 3M Company (NYSE:MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods.

Why Do We Pass on MMM?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy

2. Earnings per share have contracted by 3.4% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $141 per share, 3M trades at 17.7x forward P/E. Check out our free in-depth research report to learn more about why MMM doesn’t pass our bar.

One Stock to Watch:

Cardinal Health (CAH)

Consensus Price Target: $154.74 (1.1% implied return)

Operating as a critical link in the healthcare supply chain since 1979, Cardinal Health (NYSE:CAH) distributes pharmaceuticals and manufactures medical products for hospitals, pharmacies, and healthcare providers across the global healthcare supply chain.

Why Do We Like CAH?

1. Dominant market position is represented by its $222.3 billion in revenue, which creates significant barriers to entry in this highly regulated industry

2. Estimated revenue growth of 8.4% for the next 12 months implies demand will accelerate from its two-year trend

3. Earnings per share grew by 7.7% annually over the last five years and topped the peer group average