When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory.
Accurately determining a company’s long-term prospects isn’t easy, especially when sentiment is weak. That’s where StockStory comes in – to help you find attractive investment candidates backed by unbiased research. Keeping that in mind, here are three stocks where the outlook is warranted and some alternatives with better fundamentals.
F5 (FFIV)
Consensus price target: $437.80 (-3.5% implied return)
Originally named after the F5 tornado, the most powerful on the meteorological scale, F5 (NASDAQ:FFIV) provides security and delivery solutions that protect applications across cloud, data center, and edge environments for large organizations.
Why Is FFIV Not Exciting?
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Average billings growth of 10.9% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
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Estimated sales growth of 8.1% for the next 12 months implies demand will slow from its two-year trend
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Static operating margin over the last year shows it couldn’t become more efficient
F5’s stock price of $453.47 implies a valuation ratio of 7.2x forward price-to-sales. If you’re considering FFIV for your portfolio, see our FREE research report to learn more.
Skyworks Solutions (SWKS)
Consensus price target: $77.51 (-8.7% implied return)
Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Why Is SWKS Risky?
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Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.2% annually over the last two years
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Operating profits fell over the last five years as its sales dropped and it struggled to adjust its fixed costs
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Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
At $84.85 per share, Skyworks Solutions trades at 15.1x forward P/E. To fully understand why you should be careful with SWKS, check out our full research report (it’s free).
Boston Beer (SAM)
Consensus price target: $198.85 (-0.7% implied return)
Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE:SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.