1 of Wall Street’s Favorite Stock Worth Investigating and 2 to Brush Off

The stocks in this article have caught Wall Street’s attention in a big way, with price targets implying returns above 20%. But investors should take these forecasts with a grain of salt because analysts typically say nice things about companies so their firms can win business in other product lines like M&A advisory.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. That said, 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:

Marqeta (MQ)

Consensus Price Target: $5.04 (28% implied return)

Founded by CEO Jason Gardner in 2009, Marqeta (NASDAQ:MQ) is an innovative card issuer that provides companies with the ability to issue and process virtual, physical, and tokenized credit and debit cards.

Why Are We Hesitant About MQ?

  1. Flat sales over the last three years suggest it must innovate and find new ways to grow

  2. Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions

  3. Poor expense management has led to operating losses

At $3.92 per share, Marqeta trades at 3.2x forward price-to-sales. To fully understand why you should be careful with MQ, check out our full research report (it’s free) .

Scorpio Tankers (STNG)

Consensus Price Target: $73.09 (88.1% implied return)

Operating one of the youngest fleets in the industry, Scorpio Tankers (NYSE: STNG) is an international provider of marine transportation services, specializing in the shipment of refined petroleum.

Why Does STNG Give Us Pause?

  1. Performance surrounding its total vessels has lagged its peers

  2. Projected sales decline of 24.3% over the next 12 months indicates demand will continue deteriorating

  3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

Scorpio Tankers is trading at $34.45 per share, or 4.8x forward price-to-earnings. Read our free research report to see why you should think twice about including STNG in your portfolio, it’s free .

One Stock to Watch:

Dynatrace (DT)

Consensus Price Target: $62.10 (42% implied return)

Founded in Austria in 2005, Dynatrace (NYSE:DT) provides companies with software that allows them to monitor the performance of their full technology stack, from software applications to the infrastructure they run on.

Why Do We Like DT?

  1. ARR growth averaged 18.9% over the last year, showing customers are willing to take multi-year bets on its offerings

  2. Software is difficult to replicate at scale and leads to a top-tier gross margin of 82.2%

  3. DT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

OK