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.

At StockStory, we look beyond the headlines with our independent analysis to determine whether these bearish calls are justified. Keeping that in mind, here are three stocks facing legitimate challenges and some alternatives worth exploring instead.

Sleep Number (SNBR)

Consensus Price Target: $11 (19.3% implied return)

Known for mattresses that can be adjusted with regards to firmness, Sleep Number (NASDAQ: SNBR) manufactures and sells its own brand of bedding products such as mattresses, bed frames, and pillows.

Why Are We Out on SNBR?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Sales were less profitable over the last three years as its earnings per share fell by 39.1% annually, worse than its revenue declines
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

Sleep Number is trading at $9.22 per share, or 14.9x forward EV-to-EBITDA. To fully understand why you should be careful with SNBR, check out our full research report (it’s free).

Knowles (KN)

Consensus Price Target: $28.50 (3.5% implied return)

With roots dating back to 1946 and a focus on components that must perform flawlessly in critical situations, Knowles (NYSE: KN) designs and manufactures specialized electronic components like high-performance capacitors, microphones, and speakers for medical technology, defense, and industrial applications.

Why Is KN Risky?

1. Sales tumbled by 4.9% annually over the last five years, showing market trends are working against its favor during this cycle
2. Smaller revenue base of $593.2 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $27.55 per share, Knowles trades at 22x forward P/E. Read our free research report to see why you should think twice about including KN in your portfolio.

Darling Ingredients (DAR)

Consensus Price Target: $61.85 (19.9% implied return)

Turning what others consider waste into valuable resources, Darling Ingredients (NYSE: DAR) collects and transforms animal by-products, used cooking oil, and other bio-nutrients into valuable ingredients for food, feed, fuel, and industrial applications.

Why Are We Hesitant About DAR?

1. Products aren't resonating with the market as its revenue declined by 2.1% annually over the last three years
2. Overall productivity fell over the last year as its plummeting sales were accompanied by a decline in its operating margin
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 41.3% annually, worse than its revenue

Darling Ingredients’s stock price of $51.60 implies a valuation ratio of 17.2x forward P/E. Dive into our free research report to see why there are better opportunities than DAR.

Stocks We Like More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. 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.