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.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. That said, here are two stocks poised to prove Wall Street wrong and one facing legitimate challenges.
One Stock to Sell:
Monarch (MCRI)
Consensus Price Target: $113.50 (-7.3% implied return)
Established in 1993, Monarch (NASDAQ:MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Is MCRI Risky?
- 4.8% annual revenue growth over the last two years was slower than its consumer discretionary peers
- Forecasted free cash flow margin suggests the company will fail to improve its cash conversion over the next year
At $122.48 per share, Monarch trades at 10x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why MCRI doesn’t pass our bar.
Two Stocks to Watch:
Waters Corporation (WAT)
Consensus Price Target: $400.29 (9.5% implied return)
Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE:WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.
Why Are We Positive on WAT?
- Solid 13.9% annual revenue growth over the last two years indicates its offerings solve complex business issues
- Market share is on track to rise over the next 12 months as its 80.3% projected revenue growth implies demand will accelerate from its two-year trend
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Waters Corporation is trading at $365.46 per share, or 25.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Old Second Bancorp (OSBC)
Consensus Price Target: $23.20 (7.7% implied return)
Dating back to 1871 as one of the Chicago area's longest-standing financial institutions, Old Second Bancorp (NASDAQ:OSBC) is an Illinois-based community bank offering deposit services, commercial and consumer loans, wealth management, and mortgage products through its 53 branch locations.
Why Do We Like OSBC?
- Annual revenue growth of 21.5% over the last five years was superb and indicates its market share increased during this cycle
- Annual net interest income growth of 27.4% over the past five years was outstanding, reflecting market share gains this cycle
- Differentiated product suite leads to a best-in-class net interest margin of 4.9%
Old Second Bancorp’s stock price of $21.55 implies a valuation ratio of 1.1x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
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