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.
Unlike the investment banks, we created StockStory to provide independent analysis that helps you determine which companies are truly worth following. Keeping that in mind, here are three stocks where Wall Street’s estimates seem disconnected from reality and some better opportunities to consider.
Pegasystems (PEGA)
Consensus Price Target: $73.91 (23.7% implied return)
With a "Center-out Business Architecture" approach that transcends organizational silos, Pegasystems (NASDAQ: PEGA) develops software that helps organizations automate workflows and use artificial intelligence to improve customer experiences and business processes.
Why Does PEGA Fall Short?
- Revenue increased by 11.7% annually over the last five years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Estimated sales growth of 4.2% for the next 12 months implies demand will slow from its two-year trend
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
Pegasystems’s stock price of $59.73 implies a valuation ratio of 5.8x forward price-to-sales. If you’re considering PEGA for your portfolio, see our FREE research report to learn more.
The Real Brokerage (REAX)
Consensus Price Target: $6.33 (60.1% implied return)
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ: REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.
Why Are We Out on REAX?
- Poor expense management has led to operating margin losses
- Earnings per share fell by 6.2% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin is not anticipated to grow over the next year
The Real Brokerage is trading at $3.96 per share, or 11.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why REAX doesn’t pass our bar.
Mercury Systems (MRCY)
Consensus Price Target: $86 (20.9% implied return)
Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.
Why Do We Steer Clear of MRCY?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 7.6 percentage points
- Earnings per share fell by 18.3% annually over the last five years while its revenue grew, partly because it diluted shareholders
At $71.11 per share, Mercury Systems trades at 71.8x forward P/E. To fully understand why you should be careful with MRCY, check out our full research report (it’s free for active Edge members).
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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