The stocks in this article have caught Wall Street’s attention in a big way, with price targets implying returns above 20%. But investors should take these forecasts with a grain of salt because analysts typically say nice things about companies so their firms can win business in other product lines like M&A advisory.
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 estimates seem disconnected from reality and some better opportunities to consider.
Matson (MATX)
Consensus Price Target: $116 (70.4% implied return)
Founded by a Swedish orphan, Matson (NYSE:MATX) is a provider of ocean transportation and logistics services.
Why Are We Hesitant About MATX?
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Annual sales declines of 11.2% 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 contracted by 27.5% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
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Diminishing returns on capital suggest its earlier profit pools are drying up
Matson’s stock price of $98.32 implies a valuation ratio of 9.6x forward price-to-earnings. Read our free research report to see why you should think twice about including MATX in your portfolio, it’s free .
Hexcel (HXL)
Consensus Price Target: $68.56 (18.9% implied return)
Founded shortly after World War II by a group of engineers from UC Berkley, Hexcel (NYSE:HXL) manufactures lightweight composite materials primarily for the aerospace and defense sectors.
Why Does HXL Give Us Pause?
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Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.2% annually over the last five years
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Earnings per share have dipped by 10.5% annually over the past five years, which is concerning because stock prices follow EPS over the long term
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Below-average returns on capital indicate management struggled to find compelling investment opportunities
Hexcel is trading at $52.10 per share, or 22x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than HXL .
Guardant Health (GH)
Consensus Price Target: $46.76 (24.6% implied return)
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ:GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.
Why Do We Think Twice About GH?
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Issuance of new shares over the last five years caused its earnings per share to fall by 19% annually while its revenue grew
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Cash burn makes us question whether it can achieve sustainable long-term growth
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Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $45.50 per share, Guardant Health trades at 6.5x forward price-to-sales. If you’re considering GH for your portfolio, see our FREE research report to learn more .
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month . This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free .
