Spooked by lackluster job-growth data from ADP and a concerning lull in the nation’s manufacturing activity, the market started and finished the day in the red today. The S&P 500 closed at 2059.69, down 0.4%. That was well off the low of 2048.38, but still leaves the health of the overall market in question.
Some stocks suffered much nastier fates on Wednesday, though. ON Semiconductor Corp. (NASDAQ:ONNN), American Airlines Group Inc. (NASDAQ:AAL), and Universal Health Services, Inc. (NYSE:UHS) were among the names leading the charge lower, largely at the hands of analyst actions.
American Airlines Group (AAL)
American Airlines Group wasn’t the only airline stock to get grounded today. But the tumble from AAL hurt the most.
The prod for the pullback was a downgrade of the entire sector from Deutsche Bank, which cited waning international travel demand as reason for investors to be worried. Specifically, Deutsche Bank analyst Mike Linenberg cited “the combination of a strong U.S. dollar, greater-than-expected capacity increases by non-U.S. airlines, and decelerating global GDP growth” as major concerns.
Delta Air Lines (NYSE:DAL), United Continental (NYSE:UAL) and American Airlines had all been rated as “buys” until today, when Deutsche Bank analysts lowered their opinion on all three to just a “hold.” AAL fell 4.4% on the news.
Universal Health Services (UHS)
Though no wrong-doing has been proven yet, the mere possibility of it was enough to send Universal Health Services shares more than 4% on Wednesday.
Already in the midst of Medicare and Medicaid billing fraud investigation of its behavioral health arm, Universal Health Services reported this morning that the entire company was now being scrutinized by the Department of Justice for the same reason.
Stern, Agee & Leach downgraded UHS from “neutral” to “underperform” in response to the news, lowering its price target on the stock from $136 to $98.
ON Semiconductor (ONNN)
Semiconductor manufacturer ON Semiconductor was helpless to stave off its stock’s implosion today. All told, ONNN finished Wednesday’s session down more than 5% on the heels of a downgrade from investment bank Goldman Sachs.
Analyst Gabriela Borges said of the downgrade:
“Seasonality in analog shows that the Street has consistently underestimated the impact of changing seasonality this cycle (stronger 1H driven by industrial/auto but weaker 2H), which has driven ON’s stock to underperform by 6 percent in 2Q and 16 percent in 3Q.”
Goldman Sachs now deems ONNN a “sell,” versus its prior call of “neutral.” Borges also lowered the price target on ONNN from $12.50 to $10.50. ON Semiconductor shares closed at $11.48.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
