Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the outlook is warranted.
Two Stocks to Sell:
MSC Industrial (MSM)
Consensus Price Target: $93.50 (-11.9% implied return)
Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE: MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors
Why Do We Think MSM Will Underperform?
- Sales tumbled by 1.9% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share have contracted by 2.9% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
- Eroding returns on capital suggest its historical profit centers are aging
At $106.16 per share, MSC Industrial trades at 22.8x forward P/E. If you’re considering MSM for your portfolio, see our FREE research report to learn more.
Viatris (VTRS)
Consensus Price Target: $18.06 (9.7% implied return)
Created through the 2020 merger of Mylan and Pfizer's Upjohn division, Viatris (NASDAQ: VTRS) is a healthcare company that develops, manufactures, and distributes branded and generic medicines across more than 165 countries worldwide.
Why Should You Sell VTRS?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.6% annually over the last two years
- Earnings per share fell by 9.2% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Negative returns on capital show that some of its growth strategies have backfired, and its falling returns suggest its earlier profit pools are drying up
Viatris is trading at $16.47 per share, or 1.3x forward price-to-sales. Read our free research report to see why you should think twice about including VTRS in your portfolio.
One Stock to Buy:
Planet Labs (PL)
Consensus Price Target: $35.50 (-16.6% implied return)
Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE: PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.
Why Will PL Outperform?
- Backlog has averaged 157% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 65.4% outpaced its revenue gains
- Free cash flow profile has moved into positive territory over the last five years, indicating the company has achieved financial self-sustainability
Planet Labs’s stock price of $42.55 implies a valuation ratio of 1,736x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
