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 is one stock likely to meet or exceed Wall Street’s lofty expectations and two where consensus estimates seem disconnected from reality.
Two Stocks to Sell:
The Real Brokerage (REAX)
Consensus Price Target: $5.35 (148% implied return)
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ: REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.
Why Do We Steer Clear of REAX?
- Subpar operating margin of -0.8% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Earnings growth underperformed the sector average over the last four years as its EPS grew by just 8.9% annually
- Free cash flow margin is not anticipated to grow over the next year
The Real Brokerage’s stock price of $2.16 implies a valuation ratio of 5.3x forward EV-to-EBITDA. To fully understand why you should be careful with REAX, check out our full research report (it’s free).
Astec (ASTE)
Consensus Price Target: $71.75 (17% implied return)
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Why Are We Cautious About ASTE?
- Muted 2.7% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Backlog has dropped by 13.1% on average over the past two years, suggesting it’s losing orders as competition picks up
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
At $61.34 per share, Astec trades at 16.2x forward P/E. Read our free research report to see why you should think twice about including ASTE in your portfolio.
One Stock to Watch:
Doximity (DOCS)
Consensus Price Target: $37.77 (56.2% implied return)
With over 80% of U.S. physicians as members of its digital community, Doximity (NYSE: DOCS) operates a digital platform that enables physicians and other healthcare professionals to collaborate, stay current with medical news, manage their careers, and conduct virtual patient visits.
Why Does DOCS Stand Out?
- Annual revenue growth of 29.3% over the last five years was superb and indicates its market share is rising
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Robust free cash flow margin of 48.2% gives it many options for capital deployment
Doximity is trading at $24.19 per share, or 7.2x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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