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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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. Keeping that in mind, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
FedEx (FDX)
Consensus Price Target: $277.78 (25.7% implied return)
Sporting one of the largest air cargo fleets in the world, FedEx (NYSE:FDX) is a global provider of parcel and cargo delivery services.
Why Do We Pass on FDX?
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Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.6% annually over the last two years
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Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
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Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 1.9% annually
FedEx’s stock price of $221 implies a valuation ratio of 10x forward P/E. Check out our free in-depth research report to learn more about why FDX doesn’t pass our bar.
Myriad Genetics (MYGN)
Consensus Price Target: $9.89 (154% implied return)
Founded in 1991 as one of the pioneers in translating genetic discoveries into clinical applications, Myriad Genetics (NASDAQ:MYGN) develops genetic tests that assess disease risk, guide treatment decisions, and provide insights across oncology, women's health, and mental health.
Why Should You Dump MYGN?
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Sales trends were unexciting over the last five years as its 1.8% annual growth was below the typical healthcare company
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Earnings per share fell by 29.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
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Negative returns on capital show that some of its growth strategies have backfired, and its decreasing returns suggest its historical profit centers are aging
At $3.89 per share, Myriad Genetics trades at 30.6x forward P/E. To fully understand why you should be careful with MYGN, check out our full research report (it’s free).
Tandem Diabetes (TNDM)
Consensus Price Target: $35.14 (54.5% implied return)
With technology that automatically adjusts insulin delivery based on continuous glucose monitoring data, Tandem Diabetes Care (NASDAQ:TNDM) develops and manufactures automated insulin delivery systems that help people with diabetes manage their blood glucose levels.