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.
Accurately determining a company’s long-term prospects isn’t easy, especially when sentiment is weak. That’s where StockStory comes in - to help you find attractive investment candidates backed by unbiased research. That said, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.
Twilio (TWLO)
Consensus Price Target: $187.05 (-7.2% implied return)
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE: TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Does TWLO Fall Short?
- Below-average net revenue retention rate of 110% suggests it has some trouble expanding within existing accounts
- Gross margin of 48.7% reflects its high servicing costs
- Operating margin expanded by 4.3 percentage points over the last year as it scaled and became more efficient
Twilio’s stock price of $201.46 implies a valuation ratio of 5.2x forward price-to-sales. Read our free research report to see why you should think twice about including TWLO in your portfolio.
Papa John's (PZZA)
Consensus Price Target: $37.45 (20.2% implied return)
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Do We Avoid PZZA?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Sales are projected to tank by 5.1% over the next 12 months as demand evaporates
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 2.9 percentage points
Papa John's is trading at $31.16 per share, or 20.1x forward P/E. To fully understand why you should be careful with PZZA, check out our full research report (it’s free).
AMN Healthcare Services (AMN)
Consensus Price Target: $25.07 (-12.6% implied return)
With a network of thousands of healthcare professionals ranging from nurses to physicians to executives, AMN Healthcare (NYSE: AMN) provides healthcare workforce solutions including temporary staffing, permanent placement, and technology platforms for hospitals and healthcare facilities across the United States.
Why Do We Pass on AMN?
- Declining travelers on assignment over the past two years indicate demand is soft and that the company may need to revise its strategy
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $28.68 per share, AMN Healthcare Services trades at 26.1x forward P/E. Check out our free in-depth research report to learn more about why AMN doesn’t pass our bar.
Stocks We Like More
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
