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 are three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.
Sprout Social (SPT)
Consensus Price Target: $26.85 (33.6% implied return)
Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ:SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.
Why Are We Wary of SPT?
- Historical operating margin losses show it had an inefficient cost structure while scaling
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 7.6% for the last year
Sprout Social is trading at $20.09 per share, or 2.5x forward price-to-sales. Read our free research report to see why you should think twice about including SPT in your portfolio.
CBIZ (CBZ)
Consensus Price Target: $95 (38% implied return)
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Does CBZ Worry Us?
- Free cash flow margin shrank by 10.2 percentage points over the last five years, suggesting the company stepped up its investments to maintain its competitive edge
- Low returns on capital reflect management’s struggle to allocate funds effectively
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $68.86 per share, CBIZ trades at 18x forward P/E. To fully understand why you should be careful with CBZ, check out our full research report (it’s free).
CDW (CDW)
Consensus Price Target: $208.83 (22.8% implied return)
Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ:CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.
Why Do We Pass on CDW?
- Sales tumbled by 3.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Anticipated sales growth of 2.1% for the next year implies demand will be shaky
- Flat earnings per share over the last two years lagged its peers
CDW’s stock price of $170 implies a valuation ratio of 17.4x forward P/E. Check out our free in-depth research report to learn more about why CDW doesn’t pass our bar.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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