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. That said, here are two stocks where Wall Street’s positive outlook is supported by strong fundamentals and one where analysts may be overlooking some important risks.
One Stock to Sell:
PubMatic (PUBM)
Consensus Price Target: $11.28 (31.4% implied return)
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ: PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Is PUBM Risky?
- Below-average net revenue retention rate of 110% suggests it has some trouble expanding within existing accounts
- Forecasted revenue decline of 8.7% for the upcoming 12 months implies demand will fall off a cliff
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 5 percentage points
At $8.58 per share, PubMatic trades at 1.5x forward price-to-sales. Read our free research report to see why you should think twice about including PUBM in your portfolio.
Two Stocks to Watch:
Western Alliance Bancorporation (WAL)
Consensus Price Target: $100.50 (26.5% implied return)
Operating through five distinct regional banking divisions across the western United States, Western Alliance Bancorporation (NYSE: WAL) provides commercial banking, treasury management, mortgage services, and specialized financial solutions through its banking divisions and subsidiaries.
Why Are We Backing WAL?
- Annual net interest income growth of 19.8% over the last five years was superb and indicates its market share increased during this cycle
- Earnings per share have massively outperformed its peers over the last five years, increasing by 12.5% annually
- Balance sheet strength has increased this cycle as its 15.1% annual tangible book value per share growth over the last five years was exceptional
Western Alliance Bancorporation is trading at $79.47 per share, or 1.2x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Community Bank (CBU)
Consensus Price Target: $68 (18.5% implied return)
Tracing its roots back to 1866 in upstate New York, Community Financial System (NYSE: CBU) is a financial holding company that provides banking, employee benefits, wealth management, and insurance services to retail, commercial, and municipal customers.
Why Does CBU Stand Out?
- Annual revenue growth of 10.8% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 5.5% annually over the last two years, massively outpacing its peers
- Capital strength will likely rise over the next 12 months as its expected tangible book value per share growth of 19.9% is robust
Community Bank’s stock price of $57.39 implies a valuation ratio of 1.5x forward P/B. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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