Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
CONMED (CNMD)
Consensus Price Target: $80.43 (60% implied return)
With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE: CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products.
Why Does CNMD Fall Short?
- Annual revenue growth of 6.5% over the last five years was below our standards for the healthcare sector
- Modest revenue base of $1.31 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- ROIC of 5.3% reflects management’s challenges in identifying attractive investment opportunities
CONMED’s stock price of $48.31 implies a valuation ratio of 10.2x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than CNMD.
Addus HomeCare (ADUS)
Consensus Price Target: $140.82 (33.3% implied return)
Serving approximately 66,000 clients across 22 states with a focus on "dual eligible" Medicare and Medicaid beneficiaries, Addus HomeCare (NASDAQ: ADUS) provides in-home personal care, hospice, and home health services to elderly, chronically ill, and disabled individuals.
Why Does ADUS Give Us Pause?
- Disappointing average billable patients over the past two years imply it may need to invest in improvements to get back on track
- Subscale operations are evident in its revenue base of $1.15 billion, meaning it has fewer distribution channels than its larger rivals
- Free cash flow margin shrank by 3.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Addus HomeCare is trading at $101.79 per share, or 16.7x forward price-to-earnings. If you’re considering ADUS for your portfolio, see our FREE research report to learn more.
Cognex (CGNX)
Consensus Price Target: $47.12 (28.2% implied return)
Founded in 1981 when computer vision was in its infancy, Cognex (NASDAQ: CGNX) develops machine vision systems and software that help manufacturers and logistics companies automate quality inspection and tracking of products.
Why Is CGNX Risky?
- Sales tumbled by 4.7% annually over the last two years, showing market trends are working against its favor during this cycle
- Free cash flow margin shrank by 13.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Waning returns on capital imply its previous profit engines are losing steam
At $31.16 per share, Cognex trades at 24.7x forward price-to-earnings. Check out our free in-depth research report to learn more about why CGNX doesn’t pass our bar.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
