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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.
Elastic (ESTC)
Consensus Price Target: $121.72 (41% implied return)
Built on the powerful open-source Elasticsearch technology that powers search functionality for thousands of websites worldwide, Elastic (NYSE: ESTC) provides a search and AI platform that helps organizations find insights from their data, monitor applications, and protect against security threats.
Why Does ESTC Worry Us?
- Estimated sales growth of 11.6% for the next 12 months implies demand will slow from its two-year trend
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
- Projected 1.3 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
Elastic is trading at $86.35 per share, or 5.3x forward price-to-sales. To fully understand why you should be careful with ESTC, check out our full research report (it’s free).
Ziff Davis (ZD)
Consensus Price Target: $45.29 (22.8% implied return)
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ: ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Do We Think ZD Will Underperform?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 1.7% annually
- 15.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $36.87 per share, Ziff Davis trades at 5.4x forward P/E. Read our free research report to see why you should think twice about including ZD in your portfolio.
Reinsurance Group of America (RGA)
Consensus Price Target: $236.89 (24% implied return)
Operating behind the scenes of the insurance industry since 1973, Reinsurance Group of America (NYSE: RGA) provides life and health reinsurance services to insurance companies, helping them manage risk and meet regulatory requirements.
Why Are We Cautious About RGA?
- Book value per share was flat over the last five years, indicating it’s failed to build equity value this cycle
- Estimated book value per share growth of 1.4% for the next 12 months implies profitability will slow from its two-year trend
- Low return on equity reflects management’s struggle to allocate funds effectively
Reinsurance Group of America’s stock price of $191.06 implies a valuation ratio of 1x forward P/B. If you’re considering RGA for your portfolio, see our FREE research report to learn more.
Stocks We Like More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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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