Wall Street has set ambitious price targets for the stocks in this article. While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. That said, here is one stock where Wall Street’s excitement appears well-founded and two where analysts may be overlooking some important risks.
Two Stocks to Sell:
Simply Good Foods (SMPL)
Consensus Price Target: $41.20 (26.2% implied return)
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ: SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Why Are We Hesitant About SMPL?
- Revenue base of $1.41 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Free cash flow margin dropped by 3.1 percentage points over the last year, implying the company became more capital intensive as competition picked up
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $32.64 per share, Simply Good Foods trades at 16.2x forward P/E. Read our free research report to see why you should think twice about including SMPL in your portfolio.
The Bancorp (TBBK)
Consensus Price Target: $63.33 (24% implied return)
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ: TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
Why Are We Wary of TBBK?
- Estimated net interest income growth of 4.6% for the next 12 months implies demand will slow from its four-year trend
- High debt servicing costs relative to its earnings leave little margin for error in meeting its financial obligations
The Bancorp’s stock price of $51.07 implies a valuation ratio of 2.6x forward P/B. To fully understand why you should be careful with TBBK, check out our full research report (it’s free).
One Stock to Watch:
First Citizens BancShares (FCNCA)
Consensus Price Target: $2,185 (23% implied return)
With roots dating back to 1898 and a significant expansion through its 2023 acquisition of Silicon Valley Bank, First Citizens BancShares (NASDAQGS:FCNC.A) is a bank holding company that provides financial services to individuals and businesses through its First-Citizens Bank & Trust Company subsidiary.
Why Do We Like FCNCA?
- Impressive 49.8% annual net interest income growth over the last four years indicates it’s winning market share this cycle
- Earnings per share grew by 51.1% annually over the last two years and trumped its peers
- Annual tangible book value per share growth of 35% over the last five years was superb and indicates its capital strength increased during this cycle
First Citizens BancShares is trading at $1,777 per share, or 1.1x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
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