Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like 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 are three stocks where the skepticism is well-placed and some better opportunities to consider.
ThredUp (TDUP)
Consensus Price Target: $7.25 (-14.3% implied return)
Founded to revolutionize thrifting, ThredUp (NASDAQ: TDUP) is a leading online fashion resale marketplace offering a wide selection of gently-used clothing and accessories.
Why Is TDUP Risky?
- Sluggish trends in its orders suggest customers aren’t adopting its solutions as quickly as the company hoped
- Persistent operating margin losses suggest the business manages its expenses poorly
- Negative free cash flow raises questions about the return timeline for its investments
ThredUp’s stock price of $8.46 implies a valuation ratio of 113.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TDUP in your portfolio.
Pilgrim's Pride (PPC)
Consensus Price Target: $47.89 (4.3% implied return)
Offering everything from pre-marinated to frozen chicken, Pilgrim’s Pride (NASDAQ: PPC) produces, processes, and distributes chicken products to retailers and food service customers.
Why Does PPC Give Us Pause?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.5% for the last three years
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Commoditized products, bad unit economics, and high competition are reflected in its low gross margin of 10.7%
Pilgrim's Pride is trading at $45.90 per share, or 9.2x forward P/E. Dive into our free research report to see why there are better opportunities than PPC.
Elanco (ELAN)
Consensus Price Target: $14.86 (12.2% implied return)
Originally established as a division of pharmaceutical giant Eli Lilly before becoming independent in 2018, Elanco Animal Health (NYSE: ELAN) develops and sells medications, vaccines, and other health products for pets and farm animals across more than 90 countries.
Why Is ELAN Not Exciting?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Performance over the past five years was negatively impacted by new share issuances as its earnings per share were flat while its revenue grew
- Negative returns on capital show management lost money while trying to expand the business
At $13.25 per share, Elanco trades at 16.5x forward P/E. If you’re considering ELAN for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
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