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 are three stocks facing legitimate challenges and some alternatives worth exploring instead.

C3.ai (AI)

Consensus Price Target: $14.67 (-0.9% implied return)

Named after the three Cs of its original focus—carbon, cloud computing, and customer relationship management—C3.ai (NYSE: AI) provides enterprise AI software that helps organizations develop, deploy, and operate large-scale artificial intelligence applications across various industries.

Why Do We Steer Clear of AI?

1. Offerings struggled to generate meaningful interest as its average billings growth of 12.4% over the last year did not impress
2. Sky-high servicing costs result in an inferior gross margin of 56.5% that must be offset through increased usage
3. Negative free cash flow raises questions about the return timeline for its investments

C3.ai’s stock price of $14.80 implies a valuation ratio of 6.7x forward price-to-sales. Read our free research report to see why you should think twice about including AI in your portfolio.

Dine Brands (DIN)

Consensus Price Target: $27 (6.3% implied return)

Operating a franchise model, Dine Brands (NYSE: DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.

Why Should You Sell DIN?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
2. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6.7 percentage points
3. High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate

At $25.40 per share, Dine Brands trades at 5.5x forward P/E. To fully understand why you should be careful with DIN, check out our full research report (it’s free for active Edge members).

Essent Group (ESNT)

Consensus Price Target: $67.25 (9.5% implied return)

Serving as a crucial bridge between homebuyers and the American dream of homeownership, Essent Group (NYSE: ESNT) provides private mortgage insurance and title services that enable lenders to offer home loans with down payments of less than 20%.

Why Is ESNT Not Exciting?

1. Sluggish 3.1% annualized growth in net premiums earned over the last five years indicates the firm trailed its insurance peers
2. Efficiency has decreased over the last two years as its pre-tax profit margin fell by 10.2 percentage points
3. Incremental sales over the last two years were less profitable as its 5% annual earnings per share growth lagged its revenue gains

Essent Group is trading at $61.42 per share, or 1x forward P/B. Dive into our free research report to see why there are better opportunities than ESNT.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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