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.

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.

WeightWatchers (WW)

Consensus Price Target: $37 (214% implied return)

Known by many for its old cable television commercials, WeightWatchers (NASDAQ: WW) is a wellness company offering a range of products and services promoting weight loss and healthy habits.

Why Do We Avoid WW?

1. Annual revenue declines of 12.4% over the last five years indicate problems with its market positioning
2. Negative free cash flow raises questions about the return timeline for its investments
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

WeightWatchers’s stock price of $11.80 implies a valuation ratio of 3.9x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including WW in your portfolio.

Regal Rexnord (RRX)

Consensus Price Target: $242.56 (24.8% implied return)

Headquartered in Milwaukee, Regal Rexnord (NYSE: RRX) provides power transmission and industrial automation products.

Why Is RRX Not Exciting?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Earnings per share lagged its peers over the last two years as they only grew by 2.6% annually
3. ROIC of 4.4% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up

Regal Rexnord is trading at $194.37 per share, or 17.4x forward P/E. To fully understand why you should be careful with RRX, check out our full research report (it’s free).

Amneal (AMRX)

Consensus Price Target: $16.80 (36.3% implied return)

Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ: AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.

Why Are We Hesitant About AMRX?

1. Estimated sales growth of 2.1% for the next 12 months implies demand will slow from its two-year trend
2. Efficiency has decreased over the last five years as its adjusted operating margin fell by 1 percentage points
3. ROIC of 4.9% reflects management’s challenges in identifying attractive investment opportunities

At $12.33 per share, Amneal trades at 12.5x forward P/E. Check out our free in-depth research report to learn more about why AMRX doesn’t pass our bar.

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