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.
At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks where the skepticism is well-placed and some better opportunities to consider.
Sanmina (SANM)
Consensus Price Target: $173.75 (-0.3% implied return)
Founded in 1980, Sanmina (NASDAQ:SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
Why Do We Think Twice About SANM?
- Muted 5% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 8.2%
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Sanmina is trading at $174.30 per share, or 16.4x forward P/E. Read our free research report to see why you should think twice about including SANM in your portfolio.
Rogers (ROG)
Consensus Price Target: $124.33 (0.8% implied return)
With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE:ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.
Why Do We Avoid ROG?
- Annual sales declines of 5.5% for the past two years show its products and services struggled to connect with the market during this cycle
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 7.6 percentage points
- Earnings per share have contracted by 13.9% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
At $123.39 per share, Rogers trades at 38.5x forward P/E. Dive into our free research report to see why there are better opportunities than ROG.
Zions Bancorporation (ZION)
Consensus Price Target: $67.55 (10.8% implied return)
Founded in 1873 during Utah's pioneer era and named after Mount Zion in the Bible, Zions Bancorporation (NASDAQ:ZION) operates seven regional banks across the Western United States, providing commercial, retail, and wealth management services to over a million customers.
Why Are We Hesitant About ZION?
- Net interest income trends were unexciting over the last five years as its 3.8% annual growth was below the typical banking firm
- Earnings per share lagged its peers over the last five years as they only grew by 5.3% annually
- 1.5% annual tangible book value per share growth over the last five years was slower than its banking peers
Zions Bancorporation’s stock price of $60.94 implies a valuation ratio of 1.2x forward P/B. Check out our free in-depth research report to learn more about why ZION doesn’t pass our bar.
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