In This Article:
Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
Builders FirstSource (BLDR)
Consensus Price Target: $143.90 (29.1% implied return)
Headquartered in Irving, TX, Builders FirstSource (NYSE:BLDR) is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.
Why Are We Wary of BLDR?
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Annual sales declines of 12.1% for the past two years show its products and services struggled to connect with the market during this cycle
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Earnings per share have dipped by 23.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
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Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Builders FirstSource’s stock price of $111.50 implies a valuation ratio of 11.4x forward P/E. Check out our free in-depth research report to learn more about why BLDR doesn’t pass our bar.
Regeneron (REGN)
Consensus Price Target: $800.13 (51.3% implied return)
Founded by scientists who wanted to build a company where science could thrive, Regeneron Pharmaceuticals (NASDAQ:REGN) develops and commercializes medicines for serious diseases, with key products treating eye conditions, allergic diseases, cancer, and other disorders.
Why Do We Think Twice About REGN?
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Sizable revenue base leads to growth challenges as its 6.7% annual revenue increases over the last two years fell short of other healthcare companies
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Efficiency has decreased over the last five years as its adjusted operating margin fell by 12.3 percentage points
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Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $529 per share, Regeneron trades at 13.2x forward P/E. To fully understand why you should be careful with REGN, check out our full research report (it’s free).
Phreesia (PHR)
Consensus Price Target: $31.77 (24% implied return)
Founded in 2005 to streamline the traditionally paper-heavy patient check-in process, Phreesia (NYSE:PHR) provides software solutions that automate patient intake, registration, and payment processes for healthcare organizations while improving patient engagement in their care.