When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Lattice Semiconductor (LSCC)
Consensus Price Target: $63.08 (-4.7% implied return)
A global leader in its category, Lattice Semiconductor (NASDAQ: LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.
Why Do We Think Twice About LSCC?
- Annual sales declines of 17.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 15 percentage points
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 5.2% annually
Lattice Semiconductor is trading at $66.20 per share, or 52.9x forward P/E. Read our free research report to see why you should think twice about including LSCC in your portfolio.
Best Buy (BBY)
Consensus Price Target: $79.29 (7.4% implied return)
With humble beginnings as a stereo equipment seller, Best Buy (NYSE: BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Why Are We Cautious About BBY?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 22.4% that must be offset through higher volumes
- Operating margin of 3.1% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
At $73.84 per share, Best Buy trades at 11.5x forward P/E. Dive into our free research report to see why there are better opportunities than BBY.
Helios (HLIO)
Consensus Price Target: $57.40 (4.6% implied return)
Founded on the principle of treating others as one wants to be treated, Helios (NYSE: HLIO) designs, manufactures, and sells motion and electronic control components for various sectors.
Why Do We Think HLIO Will Underperform?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.9% annually while its revenue grew
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Helios’s stock price of $54.86 implies a valuation ratio of 25.2x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why HLIO doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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