3 of Wall Street's Favorite Stocks We Think Twice About

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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. Keeping that in mind, here are three stocks where Wall Street’s enthusiasm may be misplaced and some other investments worth exploring instead.

Cars.com (CARS)

Consensus Price Target: $16.79 (39.5% implied return)

Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.

Why Are We Cautious About CARS?

1. Market opportunities are plateauing as its dealer customers were flat over the last two years
2. Estimated sales growth of 2.5% for the next 12 months is soft and implies weaker demand
3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

At $12.04 per share, Cars.com trades at 5.2x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than CARS.

PENN Entertainment (PENN)

Consensus Price Target: $19.06 (34.1% implied return)

Established in 1982, PENN Entertainment (NASDAQ:PENN) is a diversified American operator of casinos, sports betting, and entertainment venues.

Why Is PENN Risky?

1. Muted 11.9% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

PENN Entertainment is trading at $14.22 per share, or 30x forward P/E. Check out our free in-depth research report to learn more about why PENN doesn’t pass our bar.

Jazz Pharmaceuticals (JAZZ)

Consensus Price Target: $216.44 (29.2% implied return)

Originally founded in 2003 and now headquartered in Ireland following a 2012 tax inversion merger, Jazz Pharmaceuticals (NASDAQGS:JAZZ) develops and markets medicines for sleep disorders, epilepsy, and cancer, with a focus on treatments for patients with limited therapeutic options.

Why Are We Hesitant About JAZZ?

1. Muted 4.7% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
2. Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 8.7% annually
3. 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Jazz Pharmaceuticals’s stock price of $167.50 implies a valuation ratio of 7.7x forward P/E. To fully understand why you should be careful with JAZZ, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.