1 of Wall Street's Favorite Stock on Our Buy List and 2 to Approach with Caution

Yahoo

01-05-2025

Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential. However, it's worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
Luckily for you, we at StockStory have no conflicts of interest - our sole job is to help you find genuinely promising companies. Keeping that in mind, here is one stock where Wall Street's positive outlook is supported by strong fundamentals and two where analysts may be overlooking some important risks.
Consensus Price Target: $20.81 (17.9% implied return)
Formed in 2011 with the merger of Membase and CouchOne, Couchbase (NASDAQ:BASE) is a database-as-a-service platform that allows enterprises to store large volumes of semi-structured data.
Why Does BASE Worry Us?
19.2% annual revenue growth over the last three years was slower than its software peers
Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
Historical operating losses point to an inefficient cost structure
Couchbase's stock price of $17.65 implies a valuation ratio of 4x forward price-to-sales. If you're considering BASE for your portfolio, see our FREE research report to learn more.
Consensus Price Target: $147.33 (135% implied return)
Pioneering treatments for a devastating childhood muscle-wasting disease that primarily affects boys, Sarepta Therapeutics (NASDAQ:SRPT) develops and commercializes RNA-targeted therapies and gene therapies for rare genetic disorders, primarily Duchenne muscular dystrophy.
Why Does SRPT Fall Short?
Smaller revenue base of $1.90 billion means it hasn't achieved the economies of scale that some industry juggernauts enjoy (but also enables it to grow faster if it executes properly)
Free cash flow margin dropped by 22.7 percentage points over the last five years, implying the company increased its investment activities to fend off competitors
Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $62.62 per share, Sarepta Therapeutics trades at 5.6x forward price-to-earnings. Check out our free in-depth research report to learn more about why SRPT doesn't pass our bar.
Consensus Price Target: $108.14 (20.8% implied return)
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
Why Will VRT Beat the Market?
Core business can prosper without any help from acquisitions as its organic revenue growth averaged 18.5% over the past two years
Free cash flow margin increased by 6.6 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Improving returns on capital reflect management's ability to monetize investments
Vertiv is trading at $89.52 per share, or 22.9x forward price-to-earnings. Is now a good time to buy? See for yourself in our in-depth research report, it's free.
Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
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