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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
Coty (COTY)
Consensus Price Target: $6.41 (30.4% implied return)
With a portfolio boasting many household brands, Coty (NYSE:COTY) is a beauty products powerhouse spanning cosmetics, fragrances, and skincare.
Why Do We Think COTY Will Underperform?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Sales are projected to tank by 2.5% over the next 12 months as demand evaporates
- ROIC of 0.6% reflects management’s challenges in identifying attractive investment opportunities
Coty’s stock price of $4.92 implies a valuation ratio of 8.8x forward P/E. Check out our free in-depth research report to learn more about why COTY doesn’t pass our bar.
Funko (FNKO)
Consensus Price Target: $6.25 (64.5% implied return)
Boasting partnerships with media franchises like Marvel and One Piece, Funko (NASDAQ:FNKO) is a company specializing in creating and distributing licensed pop culture collectibles.
Why Do We Steer Clear of FNKO?
- Products and services have few die-hard fans as sales have declined by 10% annually over the last two years
- Earnings per share fell by 17.2% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $3.80 per share, Funko trades at 18.3x forward P/E. Dive into our free research report to see why there are better opportunities than FNKO.
Accenture (ACN)
Consensus Price Target: $332.75 (24.6% implied return)
With a workforce of approximately 774,000 people serving clients in more than 120 countries, Accenture (NYSE:ACN) is a professional services firm that helps organizations transform their businesses through consulting, technology, operations, and digital services.
Why Are We Cautious About ACN?
- 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 3.8% for the last two years
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 4.1 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Accenture is trading at $267 per share, or 20.1x forward P/E. If you’re considering ACN for your portfolio, see our FREE research report to learn more.
Stocks We Like More
Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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