When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as 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 poised to prove Wall Street wrong and two facing legitimate challenges.
Two Stocks to Sell:
Zimmer Biomet (ZBH)
Consensus Price Target: $110.92 (5.6% implied return)
With a history dating back to 1927 and a presence in over 100 countries worldwide, Zimmer Biomet (NYSE: ZBH) designs and manufactures orthopedic products including knee and hip replacements, surgical tools, and robotic technologies for joint reconstruction and spine surgeries.
Why Are We Wary of ZBH?
- Annual revenue growth of 2.6% over the last five years was below our standards for the healthcare sector
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Underwhelming 4.2% return on capital reflects management’s difficulties in finding profitable growth opportunities
Zimmer Biomet is trading at $105.01 per share, or 13x forward P/E. Check out our free in-depth research report to learn more about why ZBH doesn’t pass our bar.
Hartford (HIG)
Consensus Price Target: $138.56 (5% implied return)
Recognizable by its iconic stag logo that dates back to 1810, The Hartford (NYSE: HIG) provides property and casualty insurance, group benefits, and investment products to individuals and businesses across the United States.
Why Are We Cautious About HIG?
- Net premiums earned only expanded by 6.2% annually over the last five years, trailing its insurance peers as its scale limited incremental business
- Sales are projected to tank by 15% over the next 12 months as demand evaporates
- Large asset base makes it harder to grow book value per share quickly, and its annual book value per share growth of 5.4% over the last five years was below our standards for the insurance sector
Hartford’s stock price of $131.91 implies a valuation ratio of 2.1x forward P/B. Read our free research report to see why you should think twice about including HIG in your portfolio.
One Stock to Watch:
First Busey (BUSE)
Consensus Price Target: $26.71 (8.7% implied return)
Tracing its roots back to 1868 during America's post-Civil War reconstruction era, First Busey (NASDAQ: BUSE) is a bank holding company that provides commercial and retail banking, wealth management, and payment technology solutions across Illinois, Missouri, Florida, and Indiana.
Why Are We Fans of BUSE?
- Annual net interest income growth of 12.9% over the past five years was outstanding, reflecting market share gains this cycle
- Exciting net interest income outlook for the upcoming 12 months calls for 50.7% growth, an acceleration from its five-year trend
- Annual tangible book value per share growth of 19% over the past two years was outstanding, reflecting strong capital accumulation this cycle
At $24.58 per share, First Busey trades at 1x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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