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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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where analysts may be overlooking some important risks.

Two Stocks to Sell:

Matrix Service (MTRX)

Consensus Price Target: $17 (34.5% implied return)

Founded in Oklahoma, Matrix Service (NASDAQ:MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.

Why Are We Cautious About MTRX?

1. Sales tumbled by 10.7% annually over the last five years, showing market trends are working against its favor during this cycle

2. High input costs result in an inferior gross margin of 4.2% that must be offset through higher volumes

3. Issuance of new shares over the last five years caused its earnings per share to fall by 23.9% annually, even worse than its revenue declines

Matrix Service’s stock price of $12.64 implies a valuation ratio of 17.1x forward P/E. If you’re considering MTRX for your portfolio, see our FREE research report to learn more.

Enphase (ENPH)

Consensus Price Target: $59.08 (23.3% implied return)

The first company to successfully commercialize the solar micro-inverter, Enphase (NASDAQ:ENPH) manufactures software-driven home energy products.

Why Does ENPH Worry Us?

1. Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases

2. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 23.7 percentage points

3. Earnings per share have contracted by 27.9% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

At $47.92 per share, Enphase trades at 14.3x forward P/E. Check out our free in-depth research report to learn more about why ENPH doesn’t pass our bar.

One Stock to Watch:

e.l.f. Beauty (ELF)

Consensus Price Target: $81.28 (8.9% implied return)

Short for "eyes, lips, face", e.l.f. Beauty (NYSE:ELF) is a developer of high-quality beauty products at accessible price points.

Why Are We Positive On ELF?

1. Impressive 50.8% annual revenue growth over the last three years indicates it's winning market share

2. Products command premium prices and result in a best-in-class gross margin of 70.8%

3. Earnings per share grew by 52.9% annually over the last three years, massively outpacing its peers