Wall Street’s bearish price targets for the stocks in this article signal serious concerns. Such forecasts are uncommon in an industry where maintaining cordial corporate relationships often trumps delivering the hard truth.
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 facing legitimate challenges and some alternatives worth exploring instead.
eBay (EBAY)
Consensus Price Target: $82.89 (-11.7% implied return)
Originally known as the first online auction site, eBay (NASDAQ: EBAY) is one of the world’s largest online marketplaces.
Why Are We Cautious About EBAY?
- Likely needs to improve its platform or increase its marketing budget for penetration to accelerate as its active buyers were flat over the last two years
- Monetization and engagement metrics haven’t budged over the last two years, suggesting it may need to increase the efficacy of its platform
- Day-to-day expenses have swelled relative to revenue over the last few years as its EBITDA margin fell by 4.3 percentage points
eBay’s stock price of $93.89 implies a valuation ratio of 13x forward EV/EBITDA. If you’re considering EBAY for your portfolio, see our FREE research report to learn more.
Under Armour (UAA)
Consensus Price Target: $7.42 (9.6% implied return)
Founded in 1996 by a former University of Maryland football player, Under Armour (NYSE: UAA) is an apparel brand specializing in sportswear designed to improve athletic performance.
Why Do We Think UAA Will Underperform?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $6.77 per share, Under Armour trades at 19.2x forward P/E. Read our free research report to see why you should think twice about including UAA in your portfolio.
WaFd Bank (WAFD)
Consensus Price Target: $32.25 (9.7% implied return)
Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.
Why Do We Avoid WAFD?
- Net interest income trends were unexciting over the last five years as its 7% annual growth was below the typical bank company
- Net interest margin shrank by 102.2 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the yields on its loan book are decreasing or the market is becoming more competitive
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 18.8% annually, worse than its revenue
WaFd Bank is trading at $29.41 per share, or 0.8x forward P/B. To fully understand why you should be careful with WAFD, check out our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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).
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