Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two facing legitimate challenges.
Two Stocks to Sell:
Sprout Social (SPT)
Consensus Price Target: $10.44 (-5% implied return)
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ: SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Does SPT Fall Short?
- Underwhelming ARR growth of 10.1% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
- Estimated sales growth of 5.3% for the next 12 months implies demand will slow from its two-year trend
- Suboptimal cost structure is highlighted by its history of operating margin losses
At $11.00 per share, Sprout Social trades at 1.3x forward price-to-sales. If you’re considering SPT for your portfolio, see our FREE research report to learn more.
Church & Dwight (CHD)
Consensus Price Target: $104.84 (6.9% implied return)
Best known for its Arm & Hammer baking soda, Church & Dwight (NYSE: CHD) is a household and personal care products company with a vast portfolio that spans laundry detergent to toothbrushes to hair removal creams.
Why Do We Think Twice About CHD?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.3%
- Earnings growth over the last three years fell short of the peer group average as its EPS only increased by 3.7% annually
Church & Dwight’s stock price of $98.11 implies a valuation ratio of 25x forward P/E. To fully understand why you should be careful with CHD, check out our full research report (it’s free).
One Stock to Buy:
Oscar Health (OSCR)
Consensus Price Target: $35.40 (5.3% implied return)
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE: OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
Why Are We Bullish on OSCR?
- Annual revenue growth of 45.5% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings per share grew by 37.4% annually over the last five years and trumped its peers
- Free cash flow margin jumped by 23.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Oscar Health is trading at $33.62 per share, or 19x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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