
3 of Wall Street’s Favorite Stocks in Hot Water

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.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. Keeping that in mind, here are three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.
Moog (MOG.A)
Consensus Price Target: $233 (31.5% implied return)
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE:MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Do We Think Twice About MOG.A?
-
Sales trends were unexciting over the last five years as its 4.2% annual growth was below the typical industrials company
-
Estimated sales growth of 2.4% for the next 12 months implies demand will slow from its two-year trend
-
Free cash flow margin shrank by 12.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Moog is trading at $172.43 per share, or 18.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why MOG.A doesn’t pass our bar .
United Parcel Service (UPS)
Consensus Price Target: $148.62 (29.2% implied return)
Trademarking its recognizable UPS Brown color, UPS (NYSE:UPS) offers package delivery, supply chain management, and freight forwarding services.
Why Do We Steer Clear of UPS?
-
Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
-
Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
United Parcel Service’s stock price of $98.42 implies a valuation ratio of 11.1x forward price-to-earnings. If you’re considering UPS for your portfolio, see our FREE research report to learn more .
CBIZ (CBZ)
Consensus Price Target: $97 (24.7% implied return)
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Does CBZ Worry Us?
-
Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
-
7.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
-
10× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly