Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.

Arcos Dorados (ARCO)

Consensus Price Target: $10.30 (47.8% implied return)

Translating to “Golden Arches” in Spanish, Arcos Dorados (NYSE: ARCO) is the master franchisee of the McDonald's brand in Latin America and the Caribbean, responsible for its operations and growth in over 20 countries.

Why Are We Wary of ARCO?

1. Lacking pricing power results in an inferior gross margin of 13% that must be offset by turning more tables
2. Poor expense management has led to an operating margin of 6.7% that is below the industry average
3. Poor free cash flow margin of -0.5% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Arcos Dorados is trading at $6.97 per share, or 11.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why ARCO doesn’t pass our bar.

Bright Horizons (BFAM)

Consensus Price Target: $137.11 (41.7% implied return)

Founded in 1986, Bright Horizons (NYSE: BFAM) is a global provider of child care, early education, and workforce support solutions.

Why Are We Out on BFAM?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Estimated sales growth of 7.6% for the next 12 months implies demand will slow from its two-year trend
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $96.77 per share, Bright Horizons trades at 21.5x forward P/E. Read our free research report to see why you should think twice about including BFAM in your portfolio.

LeMaitre (LMAT)

Consensus Price Target: $104.63 (22.6% implied return)

Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.

Why Do We Think Twice About LMAT?

1. Subscale operations are evident in its revenue base of $234.6 million, meaning it has fewer distribution channels than its larger rivals
2. Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 2.3 percentage points
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.3 percentage points

LeMaitre’s stock price of $85.31 implies a valuation ratio of 35.1x forward P/E. To fully understand why you should be careful with LMAT, check out our full research report (it’s free for active Edge members).

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out 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 183% over the last five years (as of March 31st 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-micro-cap company Tecnoglass (+1,754% 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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