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. That said, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the outlook is warranted.

Two Stocks to Sell:

Columbia Sportswear (COLM)

Consensus Price Target: $66.50 (5.4% implied return)

Originally founded as a hat store in 1938, Columbia Sportswear (NASDAQ: COLM) is a manufacturer of outerwear, sportswear, and footwear designed for outdoor enthusiasts.

Why Do We Pass on COLM?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Columbia Sportswear’s stock price of $63.11 implies a valuation ratio of 17.7x forward P/E. Check out our free in-depth research report to learn more about why COLM doesn’t pass our bar.

Parker-Hannifin (PH)

Consensus Price Target: $712.35 (6% implied return)

Founded in 1917, Parker Hannifin (NYSE: PH) is a manufacturer of motion and control systems for a wide variety of mobile, industrial and aerospace markets.

Why Does PH Fall Short?

1. 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
2. Estimated sales growth of 2% for the next 12 months implies demand will slow from its two-year trend
3. Free cash flow margin dropped by 2.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $671.75 per share, Parker-Hannifin trades at 23.6x forward P/E. To fully understand why you should be careful with PH, check out our full research report (it’s free).

One Stock to Buy:

Hims & Hers Health (HIMS)

Consensus Price Target: $47.87 (-16.2% implied return)

Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.

Why Are We Backing HIMS?

1. Business is winning new contracts that can potentially increase in value as its customer base averaged 48.6% growth over the past two years
2. Earnings per share grew by 37% annually over the last four years and trumped its peers
3. Free cash flow margin jumped by 23.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

Hims & Hers Health is trading at $57.16 per share, or 43.6x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.

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