Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. That said, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
PagerDuty (PD)
Consensus Price Target: $10.64 (-14.5% implied return)
Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.
Why Is PD Risky?
- Average billings growth of 1.1% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 1.3% for the next 12 months implies demand will slow from its two-year trend
- Projected 3.1 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
At $12.45 per share, PagerDuty trades at 1.9x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PD.
Connection (CNXN)
Consensus Price Target: $83 (3% implied return)
Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ: CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.
Why Is CNXN Not Exciting?
- Sales trends were unexciting over the last five years as its 2.3% annual growth was below the typical business services company
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 8.4% annually
- Low free cash flow margin of 2.7% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Connection’s stock price of $80.59 implies a valuation ratio of 18.3x forward P/E. Check out our free in-depth research report to learn more about why CNXN doesn’t pass our bar.
Robert Half (RHI)
Consensus Price Target: $35 (-22.1% implied return)
With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE: RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.
Why Are We Bearish on RHI?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Sales over the last five years were less profitable as its earnings per share fell by 21.3% annually while its revenue was flat
- Eroding returns on capital suggest its historical profit centers are aging
Robert Half is trading at $44.94 per share, or 27x forward P/E. Read our free research report to see why you should think twice about including RHI in your portfolio.
Stocks We Like More
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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
