The S&P 500 is up 15% this year. Tech stocks are flying. Even utilities are up 18%. But if you dig a little deeper, you’ll find some quality companies that got absolutely hammered in 2025.
We’re talking about stocks down 13%, 32%, even 34% while the broader market partied. The question is whether these declines represent real problems or just temporary setbacks that created buying opportunities.
We looked at three names that fit this profile—companies with legitimate businesses facing real challenges, but where the selloff might have gone too far. Here’s what we found.
Target (TGT) – Down 32%
Current price: ~$92 | Valuation: 12x forward earnings
Target is having a brutal year. Down 32% while the S&P rallied is the kind of underperformance that gets CEOs fired. Which is exactly what’s happening—current COO Michael Fiddelke takes over as CEO on February 1st.
The problems are well-documented. Customers pulled back on discretionary spending and focused on essentials, which hurt Target more than Walmart since groceries make up a smaller portion of their business. Add in theft issues and complaints about long checkout lines, and you’ve got a company that’s been bleeding market share.
But here’s where it gets interesting. Target just announced they’re cutting 1,800 corporate jobs—8% of their global corporate workforce. Fiddelke’s memo to employees was blunt: “Too many layers and overlapping work have slowed decisions, making it harder to bring ideas to life.”
They’re also restructuring how they fulfill online orders, moving away from using all stores as fulfillment centers to just using select locations. The idea is to streamline operations, reduce out-of-stock issues, and improve customer service.
The bigger asset that’s getting overlooked? Target’s portfolio of billion-dollar owned brands like Cat & Jack. These are higher-margin products that are already popular with shoppers. If management can fix the operational issues, these brands could shine.
At 12x forward earnings, Target is trading at multi-year lows. The risk is real—they’re still dependent on discretionary spending, and there’s no guarantee Fiddelke’s turnaround plan works. But if you believe in the brand and think the operational fixes can gain traction, this might be the entry point people look back on in a few years.
Merck (MRK) – Down 13%
Current price: ~$92 | Forward dividend yield: 3.8%
Merck is down 13% while dealing with two significant headwinds. First, Keytruda—their blockbuster cancer drug—faces increased competition and a patent cliff in 2028. Second, their HPV vaccine franchise (Gardasil) has seen declining sales due to lower demand in China and Japan.
These aren’t small problems. Keytruda generated $8.1 billion in Q3 sales alone. When that faces biosimilar competition in a few years, it’s going to impact the top line in a meaningful way.
But here’s what the market might be missing: Keytruda’s intravenous version loses patent protection in 2028, but Merck just got approval for a subcutaneous version with a different patent timeline. The drug is also approved for over 40 indications, which gives it staying power even as competition increases.
More importantly, Merck has been building the next generation of blockbusters. Winrevair, their pulmonary arterial hypertension drug launched last year, is already running at over $1 billion annually. Capvaxive, a pneumococcal vaccine, posted $244 million in Q3 sales.
The pipeline has over 80 active clinical trials. Their animal health business grew 9% year-over-year to $1.6 billion. And they’re paying a 3.8% dividend yield—more than three times the S&P 500 average—with an 85% dividend increase over the past decade.
This isn’t a growth story. It’s a dividend stock trading at a discount because investors are worried about 2028. If you’re buying for income and believe Merck can navigate the Keytruda transition while ramping new products, the 13% decline might be a gift.
Fiverr (FVRR) – Down 34%
Current price: ~$22 | Market cap: ~$1 billion
Fiverr has been destroyed since its pandemic highs. The freelance marketplace platform isn’t seeing the same activity it did when everyone was working from home and businesses were scrambling to hire remote contractors.
Down 34% this year alone, the stock has lost significant market value. But the business itself is quietly improving. Q3 revenue grew 8.3% year-over-year to $108 million. More importantly, earnings per share came in at $0.15 versus $0.04 in the prior year. They’re profitable and growing, just not at pandemic rates.
The long-term thesis is about the gig economy continuing to expand. Companies prefer the flexibility and cost savings of hiring freelancers over full-time employees. Workers want flexibility in where and when they work. Fiverr sits in the middle of that trend.
The AI angle is more interesting than people realize. Small businesses want AI capabilities but can’t afford to hire full AI teams. Fiverr gives them access to AI freelancers at a fraction of the cost. The company says demand for AI services is already helping drive results, and that trend should accelerate as AI adoption spreads.
At a $1 billion market cap after a 34% decline, Fiverr is trading like the gig economy is dead. It’s not. If they can maintain profitable growth and capture more of the AI freelancer market, this could be a significant recovery play over the next few years.