Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
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 is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where its enthusiasm might be excessive.
Two Stocks to Sell:
American Express Global Business Travel (GBTG)
Consensus Price Target: $9.91 (23.9% implied return)
Originally spun off from American Express in 2014 but maintaining the Amex GBT brand, Global Business Travel Group (NYSE: GBTG) provides end-to-end business travel and expense management solutions, connecting corporate clients with travel suppliers and offering specialized software services.
Why Are We Out on GBTG?
- 5.7% annual revenue growth over the last two years was slower than its software peers
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 5%
- Gross margin of 61.1% is below its competitors, leaving less money to invest in areas like marketing and R&D
American Express Global Business Travel is trading at $8 per share, or 1.5x forward price-to-sales. Check out our free in-depth research report to learn more about why GBTG doesn’t pass our bar.
Amdocs (DOX)
Consensus Price Target: $104.00 (26.2% implied return)
Powering the digital experiences of approximately 400 communications companies worldwide, Amdocs (NASDAQ: DOX) provides software and services that help telecommunications and media companies manage customer relationships, monetize services, and automate network operations.
Why Should You Sell DOX?
- Flat backlog over the past two years has disappointed and shows fewer customers signed long-term contracts
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.2 percentage points
At $82.44 per share, Amdocs trades at 10.9x forward P/E. To fully understand why you should be careful with DOX, check out our full research report (it’s free).
One Stock to Watch:
Shake Shack (SHAK)
Consensus Price Target: $135.48 (42.2% implied return)
Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE: SHAK) is a fast-food restaurant known for its burgers and milkshakes.
Why Should SHAK Be on Your Watchlist?
- Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
- Average same-store sales growth of 2.7% over the past two years indicates its restaurants are resonating with diners
- Free cash flow margin increased by 2.1 percentage points over the last year, giving the company more capital to invest or return to shareholders
Shake Shack’s stock price of $95.25 implies a valuation ratio of 61x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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