EVERY analyst thinks these 3 stocks are overvalued
It’s rare to find a stock that every Wall Street analyst thinks is overvalued, but I’ve got three for you today.
These aren’t tiny micro-cap stocks that no one ever heard of. They are names that the average investor, and even the average consumer, know about. We have a major soup maker, a tax preparer, and a massive utility, and every analyst thinks they are priced too high.
Are these terrible companies? No! They face a rare problem in today’s market. All these stocks have performed well this year. In fact, they all have positive year-to-date performance, an unusual accomplishment lately.
While analysts have been increasing their target price estimates for these stocks recently, their upward revisions have not kept pace with the stock gains, so all their estimates are now under water.
Each of these stocks meet the following criteria:
1) The consensus target price is lower than the stock’s current price
2) Even the most bullish analyst (the one with the highest target price estimate in the consensus) thinks the stock is overvalued
3) There are at least 5 Wall Street analysts that cover the stock
Campbell Soup (CPB)
Based on yesterday’s closing price, analyst think, on average, that Campbell Soup is over valued by 3.1% based on the consensus target price of 44.80.
Within the consensus, the lowest analyst target price estimate is 42.00. This implies that the analyst believes CPB is overvalued by 9.1%. Even the most bullish analyst, with a target price estimate of 46.00, sees the stock as overvalued by 0.5%.
Analysts have held pretty steady on their target price predictions over the past four months. The consensus rose by just 0.9% over the past month. With CPB stock higher by 6.35% year-to-date, the analysts’ target price revisions have not kept up with the stock’s price gains, leading to all their estimates being under water.
As far as ratings go for CPB, there are zero Buy or Strong Buy ratings on the stock. Eight analysts rate the stock a Hold, while 1 analyst has a Sell rating on the shares, and another has a Strong Sell recommendation.
H&R Block (HRB)
The current consensus target price for H&R Block is 28.40. This implies that the stock is overvalued by 14.8% based on yesterday’s close of 33.33.
Every analyst thinks HRB is priced too high. The lowest target price estimate in the consensus is 26.00, implying HRB is overvalued by 22.0%. The most bullish analyst, with a target price of 32.00, sees the shares overvalued by 4.0%.
The consensus target price for HRB actually increased by 2.9% over the past month, but as you can see, the consensus is still underwater because HRB shares have climbed a remarkable 41.5% year-to-date.
On the ratings front, there is some bullishness. Two analysts rate HRB a Strong Buy and 3 analysts see the shares as a Hold.
Consolidated Edison (ED)
Consolidated Edison, the New York area energy utility, has seen its stock rise by 11.6% year-to-date. Although analyst’s have been increasing their target price estimates, they have not done it aggressively enough to keep up with the stock’s price rise, so all their estimates are now under water.
The current consensus target price for ED is 82.56 which implies that the stock is overvalued by 13.3% compared to yesterday’s close of 95.22.
Within the consensus, the highest analyst estimate is 94.00 and the lowest is 71.00. This implies that the stock is overvalued anywhere between 1.3% and 25.4%.
While the analysts have been raising their target price estimates over the past four months, the analyst ratings show negativity. Five analyst rate ED a Strong Sell and another rates the stock a Sell. Only one analyst has a Strong Buy rating on ED. Two additional analysts have a Hold rating on the shares.
One of two things may happen for this trio of stocks. The analyst community may become more aggressive and increase their target price estimates. Or, today’s analyst estimates may be correct, and these stocks may indeed be overvalued.
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