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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
PacBio (PACB)
Consensus Price Target: $2.46 (43.4% implied return)
Pioneering what scientists call "HiFi long-read sequencing," recognized as Nature Methods' method of the year for 2022, Pacific Biosciences (NASDAQ: PACB) develops advanced DNA sequencing systems that enable scientists and researchers to analyze genomes with unprecedented accuracy and completeness.
Why Does PACB Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 10.6% annually over the last two years
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
PacBio’s stock price of $1.71 implies a valuation ratio of 3x forward price-to-sales. To fully understand why you should be careful with PACB, check out our full research report (it’s free).
Seadrill (SDRL)
Consensus Price Target: $56.43 (40.7% implied return)
Operating in water depths reaching 12,000 feet below the surface, Seadrill (NYSE: SDRL) owns and operates drillships and semi-submersible rigs that drill oil and gas wells in deepwater offshore locations.
Why Is SDRL Risky?
- Sales tumbled by 9.6% annually over the last ten years, showing market trends are working against it during this cycle
- Gross margin of 34.8% is below its competitors, leaving less money to invest in exploration and production
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $40.11 per share, Seadrill trades at 23.3x forward P/E. Read our free research report to see why you should think twice about including SDRL in your portfolio.
Helix Energy Solutions (HLX)
Consensus Price Target: $12.50 (46.5% implied return)
Playing a pivotal role in the 2010 Macondo oil spill response with its Q4000 vessel, Helix Energy Solutions (NYSE: HLX) provides specialized services to extend the life of offshore oil and gas wells and decommission aging infrastructure.
Why Does HLX Fall Short?
- Revenue base of $1.30 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- High extraction costs and unfavorable asset economics are reflected in its low gross margin of 11.4%
Helix Energy Solutions is trading at $8.54 per share, or 22x forward P/E. To fully understand why you should be careful with HLX, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
