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. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
Monro (MNRO)
Consensus Price Target: $18.33 (41% implied return)
Started as a single location in Rochester, New York, Monro (NASDAQ:MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Why Do We Pass on MNRO?
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Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
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Revenue base of $1.21 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
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Underwhelming 6% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
At $13 per share, Monro trades at 13.3x forward P/E. If you’re considering MNRO for your portfolio, see our FREE research report to learn more.
Owens & Minor (OMI)
Consensus Price Target: $9.75 (41.7% implied return)
With roots dating back to 1882 and operations spanning approximately 80 countries, Owens & Minor (NYSE:OMI) is a healthcare solutions company that manufactures medical supplies, distributes products to healthcare providers, and delivers medical equipment directly to patients.
Why Are We Wary of OMI?
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Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.2% for the last two years
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Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam
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Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Owens & Minor’s stock price of $6.88 implies a valuation ratio of 3.8x forward P/E. Dive into our free research report to see why there are better opportunities than OMI.
Revvity (RVTY)
Consensus Price Target: $124.84 (38% implied return)
Formerly known as PerkinElmer until its rebranding in 2023, Revvity (NYSE:RVTY) provides health science technologies and services that support the complete workflow from discovery to development and diagnosis to cure.