1 of Wall Street’s Favorite Stock to Target This Week and 2 to Think Twice About

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. Keeping that in mind, here is one stock where Wall Street’s positive outlook is supported by strong fundamentals and two where its enthusiasm might be excessive.

Consensus Price Target: $16.67 (62.9% implied return)

Founded in 1912 when metal office furniture was replacing wooden alternatives, Steelcase (NYSE:SCS) is a global office furniture manufacturer that designs and produces workplace solutions including desks, chairs, architectural products, and services.

Why Are We Out on SCS?

Annual sales declines of 3.2% for the past five years show its products and services struggled to connect with the market during this cycle

Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

Below-average returns on capital indicate management struggled to find compelling investment opportunities

Steelcase’s stock price of $10.23 implies a valuation ratio of 9.4x forward P/E. To fully understand why you should be careful with SCS, check out our full research report (it’s free).

Consensus Price Target: $225.40 (31.6% implied return)

With a network spanning 39 states and three countries, Universal Health Services (NYSE:UHS) operates acute care hospitals and behavioral health facilities across the United States, United Kingdom, and Puerto Rico.

Why Does UHS Fall Short?

Annual sales growth of 7.1% over the last five years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand

Lagging comparable store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand

Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.1 percentage points

At $171.24 per share, Universal Health Services trades at 8.6x forward P/E. If you’re considering UHS for your portfolio, see our FREE research report to learn more.

Consensus Price Target: $95.91 (71.6% implied return)

Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ:BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.