When Wall Street turns bearish on a stock, it’s worth paying attention. These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory.
Whatever the consensus opinion may be, our team at StockStory cuts through the noise by conducting independent analysis to determine a company’s long-term prospects. That said, here is one stock where Wall Street’s pessimism is creating a buying opportunity and two where the skepticism is well-placed.
Two Stocks to Sell:
CNA Financial (CNA)
Consensus Price Target: $45 (-16.1% implied return)
With roots dating back to 1853 and majority ownership by Loews Corporation, CNA Financial (NYSE: CNA) is a commercial property and casualty insurance provider offering coverage for businesses, including professional liability, surety bonds, and specialized risk management services.
Why Are We Out on CNA?
- Large revenue base constrains its growth potential, as seen in its unexciting 6.5% annualized increases in net premiums earned over the last two years fell below our expectations for the insurance sector
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 1% annually while its revenue grew
- Annual book value per share declines of 2% for the past five years show its capital management struggled during this cycle
CNA Financial’s stock price of $53.66 implies a valuation ratio of 11.7x forward P/E. Check out our free in-depth research report to learn more about why CNA doesn’t pass our bar.
Webster Financial (WBS)
Consensus Price Target: $75.42 (-0.6% implied return)
Founded during the Great Depression in 1935 and evolving into a major Northeastern financial institution, Webster Financial (NYSE: WBS) is a bank holding company that provides commercial banking, consumer banking, and employee benefits solutions through its Webster Bank and HSA Bank division.
Why Does WBS Fall Short?
- 5.2% annual revenue growth over the last two years was slower than its banking peers
- Estimated net interest income growth of 5.9% for the next 12 months implies demand will slow from its five-year trend
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5.9% annually
At $75.90 per share, Webster Financial trades at 1.2x forward P/B. Dive into our free research report to see why there are better opportunities than WBS.
One Stock to Buy:
Datadog (DDOG)
Consensus Price Target: $265.53 (5.6% implied return)
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ: DDOG) provides a software platform that helps organizations monitor and secure their cloud applications, infrastructure, and services.
Why Will DDOG Beat the Market?
- Ability to secure long-term commitments with customers is evident in its 29.5% ARR growth over the last year
- Expected revenue growth of 24.2% for the next year suggests its market share will rise
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
Datadog is trading at $251.49 per share, or 19.7x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
