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 enthusiasm may be misplaced and some other investments worth exploring instead.

Arcos Dorados (ARCO)

Consensus Price Target: $10.96 (36.5% 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 Does ARCO Fall Short?

1. Estimated sales growth of 5.2% for the next 12 months implies demand will slow from its five-year trend

2. Challenging supply chain dynamics and bad unit economics are reflected in its low gross margin of 13.4%

3. Poor free cash flow margin of -0.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

At $8.03 per share, Arcos Dorados trades at 0.3x forward price-to-sales. If you’re considering ARCO for your portfolio, see our FREE research report to learn more .

MillerKnoll (MLKN)

Consensus Price Target: $30.50 (82.2% implied return)

Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ:MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide.

Why Are We Out on MLKN?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 7.8% annually over the last two years

2. Earnings per share fell by 9.6% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable

3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.7 percentage points

MillerKnoll is trading at $16.74 per share, or 6.7x forward price-to-earnings. To fully understand why you should be careful with MLKN, check out our full research report (it’s free) .

Neogen (NEOG)

Consensus Price Target: $9 (75.4% implied return)

Founded in 1981 and operating at the intersection of food safety and animal health, Neogen (NASDAQ:NEOG) develops and manufactures diagnostic tests and related products to detect dangerous substances in food and pharmaceuticals for animal health.