Despite a surprise dip in March’s industrial output and activity, investors found a reason keep buying stocks, pushing them back to the brink of new multi-year highs. When all was said and done, the S&P 500 closed at 2,106.63, up 0.51%.
It wasn’t a great day for every ticker out there, however. In fact, Wednesday was miserable for Advaxis, Inc. (NASDAQ:ADXS), ASML Holding NV (NASDAQ:ASML) and Precision Castparts Corp. (NYSE:PCP). Here’s why.
Precision Castparts (PCP)
Ongoing weakness in the price of oil has hit Precision Castparts harder than was previously anticipated, sending PCP shares down nearly 4% as a result.
Precision Castparts, which makes a variety of castings used by aerospace, industrial, and energy companies, reported on Wednesday it would be taking a $363 million accounting charge, most of which stems from an investment in Chinese company Yangzhou Chengde Steel Tube that has since soured on the heels of a weak oil and gas market.
All told, the company now expects to post operating earnings between $2.90 and $2.95 per share for its fourth fiscal quarter, falling far short of analyst estimates of $3.21 per share.
ASML Holding (ASML)
The good news: Semiconductor maker ASML Holding did better than expected last quarter. The bad news: The current quarter isn’t likely to bear as much fruit as first thought.
All told, ASML Holding earned 93 cents per share in its first quarter, topping estimates of 92 cents per share of ASML. The top line of $1.65 billion was better than the anticipated $1.62 billion. Yet, the company only foresees revenue of 1.6 billion euros for Q2, versus estimates of 1.64 billion euros.
ASML Holding makes several pieces of equipment, but its newest claim to fame was hoped to be extreme ultra-violet lithography, or EUV, equipment needed to make ultra-small microchips. The challenge to making and selling EUV equipment is the price. One machine can costs tens of million of dollars, making the sell-through process a hot and cold one.
To that end, Bernstein Research analyst Pierre Ferragu may have offered the most level-headed take on the matter, saying:
“…we echo our previous conclusions, we expect the second quarter of 2015 to disappoint expectations as TSMC [Taiwan Semiconductor] lithography orders are pushed towards the back end of the year. We therefore continue to recommend investors to err on the side of caution in the next couple of quarters and add to positions over on weakness. However, our long-term thesis is unchanged; we remain very optimistic on the future of ASML and see continued upside potential to the recent stock price.”
ASML finished the day down almost 4%.
Advaxis (ADXS)
In retrospect, it can’t be a surprise Advaxis shares were down more than 12% today. The stock has been overheated for several weeks now, fueled by a combination of too much bullish chatter, lots of enthusiasm regarding its biotechnology, and plain old momentum. Too much of anything is too much though, and with ADXS ripe for a pullback, the sellers finally capitalized on the opportunity.
Advaxis is the developer of cancer immunotherapy drugs, the furthest along of which is ADXS-HPV, as a treatment for cervical and other cancers. That sliver of drug-creation has been red hot of late, sending ADXS shares up as much as 600% between the end of November and the middle of last week.
And, oddly enough (and as evidence that the market has a case of immunotherapy-mania) the looming IPO of immunotherapy drug maker Aduro Biotech (NASDAQ:ADRO) has actually been bullish for Advaxis shares rather than bearish.
It all began to unravel today, though, in the wake of the ADRO IPO. Recognizing (1) that ADXS is overbought and (2) having a new competitor to deal with isn’t a good thing, the sentiment pendulum that carried ADXS so high now looks like it’s swinging in the other direction.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
