Another uneventful day on Wall Street. The S&P 500 closed at 2107.78, down 0.45% after closing at a record high just the day before. A lack of any meaningful news may have been the bulk of the reason the bulls didn’t remain interested after Monday’s record-breaking session.
Among the names leading the charge lower were MannKind Corporation (NASDAQ:MNKD), Micron Technology, Inc. (NASDAQ:MU) and Alibaba Group Holding Ltd (NYSE:BABA). Downgrades undermined two of them.
Alibaba Group Holding (BABA)
With Alibaba Group Holding shares hitting new lows and now almost 30% off their November-2014 peak, to say the luster has worn off this once-shiny stock would be an understatement.
At the core of today’s near-3% selloff were rumors suggesting the vendors that use the Alibaba platform to sell their products were submitting fake orders in order to improve their visibility at the shopping site. More activity implies greater popularity, and Alibaba is more apt to feature that particular “store” if it’s generating more revenue than other vendors.
CEO Jack Ma offered reasonable explanations and fixes, but investors aren’t fans of anything that even hints of scandal.
At the same time, BABA was also pressured on Tuesday by news that competing e-commerce site JD.Com Inc. (NASDAQ:JD) posted earnings for its prior quarter that were better than anticipated. The market may have feared that investors, who often choose one stock over another in a particular category, would see JD.com as the higher-growth play from here.
Micron Technology (MU)
Not that Micron Technology shares weren’t behind the eight ball already, but Nomura Securities may have dealt the stock something of a short-term death blow today when it downgraded MU from a “buy” to only a “neutral” recommendation.
The bulk of the downgrade stemmed from concerns that Micron Technology would need to spend heavily this year in order to remain competitive next year. In numerical terms, Nomura now only expect the company to post a profit of $4.00 per share of MU, versus a prior expectations of $4.85, on rising capital spending.
MU shares fell more than 5% in the wake of the downgrade, and are now down nearly 20% since their December high. The close near $29.66 was in line with Nomura’s new price target of $30 for MU.
MannKind Corporation (MNKD)
Sales of the well-ballyhooed inhaled insulin Afrezza are off to a surprisingly slow start, and Goldman Sachs is already passing stern judgment on its developer MannKind Corporation.
The specifics: Investment bank and research firm Goldman Sachs downgrades MNKD from a “neutral” rating to a “sell” on Tuesday, explaining a combination of growing price pressure in the diabetes space along with a disappointing first month of sales was a troubling omen for MNKD.
Goldman Sachs analyst Jay Olson noted:
“Diabetes market dynamics have deteriorated as reflected by growing pressure on prices and slow launch uptakes — both of which have been unfavorably influenced by payors as they leverage their formularies.”
MNKD finished the session down 7%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
