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.

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 two stocks where Wall Street’s pessimism is creating a buying opportunity and one facing legitimate challenges.

One Stock to Sell:

First Interstate BancSystem (FIBK)

Consensus Price Target: $37.88 (8.3% implied return)

Tracing its roots back to 1971 and still guided by founding family principles, First Interstate BancSystem (NASDAQ: FIBK) operates a network of community banks across 14 western and midwestern states, offering comprehensive banking services to individuals, businesses, and government entities.

Why Do We Think FIBK Will Underperform?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.5% annually over the last two years
2. Overall productivity is expected to decrease over the next year as Wall Street thinks its efficiency ratio will degrade by 5.2 percentage points
3. Capital generation is forecasted to stall as its estimated tangible book value per share for the next 12 months is flat

At $34.98 per share, First Interstate BancSystem trades at 1x forward P/B. Check out our free in-depth research report to learn more about why FIBK doesn’t pass our bar.

Two Stocks to Buy:

Planet Labs (PL)

Consensus Price Target: $24.71 (0.6% implied return)

Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE: PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.

Why Will PL Outperform?

1. Backlog has averaged 177% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
2. Free cash flow turned positive over the last five years, indicating the company has achieved financial self-sustainability
3. Returns on capital are increasing as management’s prior bets are starting to bear fruit

Planet Labs’s stock price of $24.57 implies a valuation ratio of 863.1x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.

HCA Healthcare (HCA)

Consensus Price Target: $541.52 (1.5% implied return)

With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.

Why Do We Love HCA?

1. Dominant market position is represented by its $75.6 billion in revenue, which creates significant barriers to entry in this highly regulated industry
2. Share buybacks catapulted its annual earnings per share growth to 21%, which outperformed its revenue gains over the last five years
3. Industry-leading 28.7% return on capital demonstrates management’s skill in finding high-return investments

HCA Healthcare is trading at $533.45 per share, or 18x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

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