In This Article:
Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. That said, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the outlook is warranted.
Two Stocks to Sell:
Frontdoor (FTDR)
Consensus Price Target: $54.25 (0.5% implied return)
Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ:FTDR) is a provider of home warranty and service plans.
Why Is FTDR Not Exciting?
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Demand for its offerings was relatively low as its number of home service plans has underwhelmed
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Free cash flow margin is forecasted to shrink by 2.4 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
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Eroding returns on capital suggest its historical profit centers are aging
Frontdoor’s stock price of $53.99 implies a valuation ratio of 18x forward P/E. If you’re considering FTDR for your portfolio, see our FREE research report to learn more.
Premier (PINC)
Consensus Price Target: $21.14 (-7.1% implied return)
Operating one of the largest healthcare group purchasing organizations in the United States with over 4,350 hospital members, Premier (NASDAQ:PINC) is a technology-driven healthcare improvement company that helps hospitals, health systems, and other providers reduce costs and improve clinical outcomes.
Why Are We Out on PINC?
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Annual sales declines of 9.3% for the past two years show its products and services struggled to connect with the market during this cycle
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Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
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Inability to adjust its cost structure while its revenue declined over the last two years led to a 11.2 percentage point drop in the company’s adjusted operating margin
At $22.75 per share, Premier trades at 16.9x forward P/E. Check out our free in-depth research report to learn more about why PINC doesn’t pass our bar.
One Stock to Watch:
Autodesk (ADSK)
Consensus Price Target: $320.15 (8.2% implied return)
Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.