Already vulnerable following Tuesday’s tumble, concerns voiced by Janet Yellen about the market’s valuation in the shadow of disappointingly low job-growth numbers last month were more than enough to upend stocks again on Wednesday.
By the time the closing bell rang, the S&P 500 closed at 2,080.15, off another 0.45%.
Leading the bearish charge were Groupon Inc. (NASDAQ:GRPN), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and 3D Systems Corporation (NYSE:DDD). Here’s why those names were hit particularly hard.
3D Systems (DDD)
As if 3D Systems needed any more of a headwind, the Q1 earnings beat the company posted this morning was thoroughly trumped by the company’s decision to withdraw its previous full-year guidance. Moreover, it will wait until the 3D printer outlook was clearer before offering guidance again.
Concerned DDD shareholders were (understandably) quick to assume this unwillingness to share an outlook ultimately meant 3D Systems didn’t want to put any more bad news in print than it had to.
And, that actually may have been the right decision. While revenue grew 9% in the first quarter, it was the slowest quarterly sales growth 3D Systems has seen in years. Earnings of five-cents per share topped estimates for a gain of four cents, but fell well short of the 15 cents per share the company posted in the same quarter a year earlier.
All told, DDD fell more than 5% on Wednesday.
Groupon (GRPN)
After three years, Groupon still hasn’t quite figured out what it’s supposed to do in order to meaningfully grow its business.
That reality became pretty clear to GRPN shareholders today after the online-coupon company posted less-than-compelling first quarter results. Revenue was only up 3% on a year-over-year basis, and, worse, Groupon lowered its second-quarter revenue forecast to somewhere between $720 million and $750 million, versus average estimates of $827 million. The stock closed nearly 8% lower on the disappointing numbers.
Still, GRPN has a few fans and friends left on Wall Street. Brean Capital’s Groupon analyst noted:
“If the headlines that Groupon missed against the consensus 1Q forecasts drive the shares lower, we would recommend investors purchase shares because of the strength of its operating performance against the proper barometers.”
Alexion Pharmaceuticals (ALXN)
For the first time in a long time, the market didn’t celebrate a biotech acquisition by buying more shares of the two companies teaming up. In fact, traders made a point of selling stock of the suitor.
The suitor was Alexion Pharmaceuticals. The target was Synageva Biopharma Corp. (NASDAQ:GEVA). The price was $230 per share of GEVA. The problem was the premium. Alexion Pharmaceuticals offered Synageva a price that was 124% higher than the pre-deal price of the targeted company’s stock. It was the third-highest premium ever paid for a +$5 billion acquisition in the history of U.S. M&A.
Alexion will be adding an impressive stable of rare-disease (read “high-priced”) drugs to its menu, including Kanuma, which was developed to treat LAL-Deficiency, which is currently being reviewed by U.S. and European regulatory bodies. ALXN shareholders, however, clearly feel the company overpaid for Synageva Biopharma, and sent shares of Alexion down more than 8% to make that point.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
