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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bullish calls are justified. That said, here are three stocks where Wall Street may be overlooking some important risks and some alternatives with better fundamentals.

Bandwidth (BAND)

Consensus Price Target: $24.60 (81.8% implied return)

Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ:BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.

Why Do We Avoid BAND?

1. Revenue increased by 15.1% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Demand will likely fall over the next 12 months as Wall Street expects flat revenue
3. Gross margin of 37.4% is way below its competitors, leaving less money to invest in areas like marketing and R&D

Bandwidth’s stock price of $12.10 implies a valuation ratio of 0.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BAND.

Ruger (RGR)

Consensus Price Target: $46 (18.5% implied return)

Founded in 1949, Ruger (NYSE:RGR) is an American manufacturer of firearms for the commercial sporting market.

Why Are We Cautious About RGR?

1. Annual sales declines of 5.2% for the past two years show its products and services struggled to connect with the market
2. Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $38.82 per share, Ruger trades at 15.4x forward price-to-earnings. Check out our free in-depth research report to learn more about why RGR doesn’t pass our bar.

Bausch + Lomb (BLCO)

Consensus Price Target: $20.66 (53.7% implied return)

With a nearly 170-year history dedicated to vision care and eye health innovation, Bausch + Lomb (NYSE:BLCO) develops and manufactures a comprehensive range of eye health products including contact lenses, pharmaceuticals, surgical devices, and consumer eye care solutions.

Why Are We Wary of BLCO?

1. Annual revenue growth of 5% over the last five years was below our standards for the healthcare sector
2. Earnings per share fell by 23.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Bausch + Lomb is trading at $11.90 per share, or 15.6x forward price-to-earnings. To fully understand why you should be careful with BLCO, check out our full research report (it’s free).

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.