Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. Keeping that in mind, here is one stock likely to meet or exceed Wall Street’s lofty expectations and two where its enthusiasm might be excessive.
Two Stocks to Sell:
8x8 (EGHT)
Consensus Price Target: $2.48 (45.1% implied return)
Named after its founding year (1987) with "8x8" representing binary code for communications, 8x8 (NASDAQ: EGHT) provides cloud-based contact center and unified communications solutions that enable businesses to manage customer interactions and internal communications through a single platform.
Why Do We Think EGHT Will Underperform?
- Products, pricing, or go-to-market strategy may need some adjustments as its 4.6% average billings growth over the last year was weak
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Operating margin was unchanged over the last year, suggesting it failed to gain leverage on its fixed costs
8x8’s stock price of $1.71 implies a valuation ratio of 0.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than EGHT.
Nature's Sunshine (NATR)
Consensus Price Target: $35 (64% implied return)
Started on a kitchen table in Utah, Nature’s Sunshine (NASDAQ: NATR) manufactures and sells nutritional and personal care products.
Why Are We Wary of NATR?
- 5.3% annual revenue growth over the last three years was slower than its consumer staples peers
- Revenue base of $489.8 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Poor expense management has led to an operating margin of 5.3% that is below the industry average
At $21.34 per share, Nature's Sunshine trades at 17.2x forward P/E. To fully understand why you should be careful with NATR, check out our full research report (it’s free).
One Stock to Watch:
Noble Corporation (NE)
Consensus Price Target: $50 (31.1% implied return)
With origins dating back over a century to 1921, Noble Corporation (NYSE: NE) operates drilling rigs that oil and gas companies charter to drill wells in deep ocean waters and shallow seas.
Why Should NE Be on Your Watchlist?
- Market share has increased this cycle as its 30.2% annual revenue growth over the last five years was exceptional
- Economies of scale give it more fixed cost leverage than its smaller competitors
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
Noble Corporation is trading at $38.13 per share, or 31.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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