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.

Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.

Foot Locker (FL)

Consensus Price Target: $23.91 (-8.8% implied return)

Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE: FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.

Why Do We Steer Clear of FL?

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. Subpar operating margin of -0.7% has withered over the last year, constraining its ability to invest in process improvements or effectively respond to new competitive threats
3. 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Foot Locker’s stock price of $26.23 implies a valuation ratio of 19.6x forward P/E. Dive into our free research report to see why there are better opportunities than FL.

Sotera Health Company (SHC)

Consensus Price Target: $16 (-3% implied return)

With a critical role in ensuring the safety of millions of patients worldwide, Sotera Health (NASDAQGS:SHC) provides sterilization services, lab testing, and advisory services to ensure medical devices, pharmaceuticals, and food products are safe for use.

Why Does SHC Worry Us?

1. Sales trends were unexciting over the last five years as its 7.3% annual growth was below the typical healthcare company
2. Subscale operations are evident in its revenue base of $1.12 billion, meaning it has fewer distribution channels than its larger rivals
3. Poor free cash flow margin of 1.1% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

At $16.50 per share, Sotera Health Company trades at 20.9x forward P/E. If you’re considering SHC for your portfolio, see our FREE research report to learn more.

Pediatrix Medical Group (MD)

Consensus Price Target: $16.71 (-2.8% implied return)

With a network of approximately 2,620 affiliated physicians caring for some of the most vulnerable patients, Pediatrix Medical Group (NYSE: MD) provides specialized physician services focused on neonatal, maternal-fetal, pediatric cardiology and other pediatric subspecialty care across 37 states.

Why Do We Avoid MD?

1. Poor comparable store sales performance over the past two years indicates it’s having trouble bringing new patients into its facilities
2. Projected sales decline of 1.5% over the next 12 months indicates demand will continue deteriorating
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Pediatrix Medical Group is trading at $17.20 per share, or 10.4x forward P/E. Check out our free in-depth research report to learn more about why MD 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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