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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.
eHealth (EHTH)
Consensus Price Target: $9.50 (176% implied return)
Aiming to address a high-stakes and often confusing decision, eHealth (NASDAQ:EHTH) guides consumers through health insurance enrollment and related topics.
Why Does EHTH Fall Short?
- Intense competition is diverting traffic from its platform as its estimated membership fell by 2.2% annually
- Projected sales decline of 2.4% for the next 12 months points to a tough demand environment ahead
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
eHealth’s stock price of $3.44 implies a valuation ratio of 2.6x forward EV/EBITDA. Check out our free in-depth research report to learn more about why EHTH doesn’t pass our bar.
Grid Dynamics (GDYN)
Consensus Price Target: $13.75 (79% implied return)
With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.
Why Are We Wary of GDYN?
- Revenue base of $389.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Earnings per share fell by 3.3% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Push for growth has led to negative returns on capital, signaling value destruction
At $7.68 per share, Grid Dynamics trades at 17.2x forward P/E. Dive into our free research report to see why there are better opportunities than GDYN.
Donnelley Financial Solutions (DFIN)
Consensus Price Target: $70.67 (30.3% implied return)
Born from the need to navigate increasingly complex financial regulations in the digital age, Donnelley Financial Solutions (NYSE:DFIN) provides software and technology-enabled services that help companies comply with SEC regulations and manage financial transactions and reporting requirements.
Why Is DFIN Not Exciting?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.5% annually over the last five years
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.3% annually
Donnelley Financial Solutions is trading at $54.25 per share, or 1.9x forward price-to-sales. Read our free research report to see why you should think twice about including DFIN in your portfolio.
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Tecnoglass (+1,754% 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
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