Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Wayfair (W)
Consensus Price Target: $91.74 (-1.7% implied return)
Founded in 2002 by Niraj Shah, Wayfair (NYSE: W) is a leading online retailer of mass-market home goods in the US, UK, Canada, and Germany.
Why Does W Give Us Pause?
- Intense competition is diverting traffic from its platform as its active customers fell by 2.5% annually
- Estimated sales growth of 5.2% for the next 12 months is soft and implies weaker demand
- High servicing costs result in an inferior gross margin of 30.2% that must be offset through higher volumes
Wayfair is trading at $93.29 per share, or 16.2x forward EV/EBITDA. Check out our free in-depth research report to learn more about why W doesn’t pass our bar.
Hormel Foods (HRL)
Consensus Price Target: $26.50 (4.9% implied return)
Best known for its SPAM brand, Hormel (NYSE: HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Why Do We Steer Clear of HRL?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 16.2% that must be offset through higher volumes
- Performance over the past three years shows each sale was less profitable, as its earnings per share fell by 6.2% annually
At $25.26 per share, Hormel Foods trades at 16.2x forward P/E. To fully understand why you should be careful with HRL, check out our full research report (it’s free).
Oceaneering (OII)
Consensus Price Target: $35.25 (-3.3% implied return)
Deploying a fleet of 250 tethered underwater robots around the globe, Oceaneering International (NYSE: OII) provides remotely operated underwater vehicles and subsea equipment for offshore energy exploration.
Why Should You Sell OII?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last ten years
- Gross margin of 17.4% reflects its high production costs and unfavorable asset base
- Poor free cash flow margin of 4.7% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Oceaneering’s stock price of $36.47 implies a valuation ratio of 8.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than OII.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
