Why Vale SA (ADR) (VALE), Tesla Motors Inc (TSLA) and Pacira Pharmaceuticals Inc (PCRX) Are 3 of Today’s Worst Stocks

Advertisement

Whether it’s a good thing or a bad thing is up for debate, but there’s no denying the Nasdaq Composite’s move above the key 5000 mark for the first time since the year 2000 was big news today. In fact, the close at 5008.10 was only the third time the composite has ever closed above 5000.

Why Vale SA (ADR) (VALE), Tesla Motors Inc (TSLA) and Pacira Pharmaceuticals Inc (PCRX) Are 3 of Today's Worst StocksNot every stock hit new highs on Monday, however. In fact, Vale SA (ADR) (NYSE:VALE), Tesla Motors Inc (NASDAQ:TSLA) and Pacira Pharmaceuticals Inc (NASDAQ:PCRX) were at the extreme other end of the spectrum, losing a lot of ground for understandable reasons.

Here’s the deal:

Tesla Motors (TSLA)

Tesla Motors was hit by a tidal wave of negative press over the past few days, not the least of which was David Stockman, a former director of the Office of Management and Budget under President Reagan and apparently a stock picker over at Casey Research, calling the company a “crony capitalist con.”

The real killer, however, was more likely this Barron’s commentary pointing out three realities the company may be hoping owners of TSLA stock don’t notice. The most damning of the three concerns was the fact that very little of its recent capital expenditures were directed toward the oft-ballyhooed gigafactory for the lithium-based batteries that power most electric vehicles.

The big “so what?” is best explained by Barclays’ Brian Johnson:

“However, with only $107mn of spend on the gigafactory to date, plus minimal spend on gigafactory/Model 3 reflected in R&D and SG&A, it is yet another reminder that Tesla has yet to realize the uptick in spend associated with the gigafactory and Model 3.”

Translation: Heavy spending isn’t here yet, but it’s on the way. TSLA stock tumbled more than 3% in the wake of all this news.

Vale SA (VALE)

It certainly wasn’t alone on its way the lower lows on Monday, but Vale SA was the worst of the worst-performing materials names today. When all was said and done, VALE stock closed down nearly 4%.

The prompt for the pullback may have ultimately been last quarter’s numbers. The Brazilian metal miner posted a loss of $1.85 billion in its fourth quarter, which was better than the year-ago figure. VALE is deliberately shrinking itself though, as most metal markets remain soft.

What really up-ended VALE shares, though, was an even lower price target on VALE stock from Credit Suisse. Credit Suisse still rates Vale SA as an “underperform,” but dropped its target on the stock from a price of $7.50 to $7 because of balance sheet concerns.

Pacira Pharmaceuticals (PCRX)

Considering shares of Pacira Pharmaceuticals had rallied nearly 40% this year leading up to today’s announcement, it’s pretty clear investors were expecting good news from the FDA today. When — surprise! — they didn’t get it, the response was a 19% drubbing for PCRX.

What happened: Pacira Pharmaceuticals had requested the Food & Drug Administration widen the permissible uses of a drug called Exparel to include as a post-surgery nerve-numbing injection in cases where it would be difficult to apply an existing approved painkiller. The FDA didn’t like the idea.

PCRX said it is already looking at other possible uses for Exparel, and in the meantime, Exparel can still be used as a post-surgical numbing agent.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/03/why-vale-sa-adr-vale-tesla-motors-inc-tsla-and-pacira-pharmaceuticals-inc-pcrx-are-3-of-todays-worst-stocks/.

©2024 InvestorPlace Media, LLC