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 are two stocks where Wall Street’s excitement appears well-founded and one where analysts may be overlooking some important risks.
Consensus Price Target: $30.75 (26.7% implied return)
With its watches displayed in 20 museums around the world, Movado (NYSE:MOV) is a watchmaking company with a portfolio of watch brands and accessories.
Why Do We Think MOV Will Underperform?
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4.7% annual revenue growth over the last five years was slower than its consumer discretionary peers
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Low free cash flow margin of 4.3% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
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Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Movado is trading at $24.27 per share, or 15.1x forward P/E. Check out our free in-depth research report to learn more about why MOV doesn’t pass our bar.
Consensus Price Target: $241.82 (36.4% implied return)
Named after the unique architecture of its data warehouse which resembles a snowflake pattern, Snowflake (NYSE:SNOW) provides a cloud-based data platform that enables organizations to consolidate, analyze, and share data across multiple cloud providers.
Why Are We Bullish on SNOW?
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Billings have averaged 36% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
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Platform plays a pivotal role in customer workflows as its net revenue retention rate punches in at 125%
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Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
Snowflake’s stock price of $177.33 implies a valuation ratio of 9.7x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Consensus Price Target: $112 (26.8% implied return)
Originally founded as Bank of Internet USA in 1999 before rebranding in 2018, Axos Financial (NYSE:AX) is a diversified financial services company that provides digital banking, securities clearing, and investment advisory solutions to retail and business customers nationwide.