Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like 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 skepticism is well-placed.
Two Stocks to Sell:
Match Group (MTCH)
Consensus Price Target: $36.24 (-2.7% implied return)
Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ: MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.
Why Are We Hesitant About MTCH?
- Intense competition is diverting traffic from its platform as its payers fell by 4.7% annually
- Platform has lost its luster lately as engagement trends have been sluggish and its average revenue per user has declined by 21% annually
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
Match Group’s stock price of $37.24 implies a valuation ratio of 9.4x forward EV/EBITDA. If you’re considering MTCH for your portfolio, see our FREE research report to learn more.
Allient (ALNT)
Consensus Price Target: $69.10 (-6.5% implied return)
Founded in 1962, Allient (NASDAQ: ALNT) develops and manufactures precision and specialty-controlled motion components and systems.
Why Does ALNT Fall Short?
- Sales tumbled by 2.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share have contracted by 2.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $73.89 per share, Allient trades at 28.2x forward P/E. Check out our free in-depth research report to learn more about why ALNT doesn’t pass our bar.
One Stock to Buy:
Seagate (STX)
Consensus Price Target: $737.11 (12.9% implied return)
One of two remaining major hard drive manufacturers after decades of industry consolidation, Seagate (NASDAQ: STX) manufactures hard disk drives and solid state drives that store data in data centers, cloud systems, and consumer devices.
Why Is STX a Top Pick?
- Market share has increased this cycle as its 32.6% annual revenue growth over the last two years was exceptional
- Projected revenue growth of 39.5% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Free cash flow margin jumped by 9.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Seagate is trading at $652.81 per share, or 24.8x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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