The market started the new week in the same bullish mood it finished the previous one, at least partially encouraged by the 2.1% uptick in March’s factory orders. By the time the closing bell rang, the S&P 500 was up 0.29%, closing at 2,114.49.
Monday wasn’t an encouraging day for every stock, though. Abercrombie & Fitch Co. (NYSE:ANF), Anheuser Busch Inbev SA (NYSE:BUD) and CSX Corporation (NYSE:CSX) all dipped into the red ink for today’s session. Here’s what investors need to know.
Anheuser Busch (BUD)
Shareholders of Anheuser Busch Inbev who thought last week’s debacle was finally over were, unfortunately, mistaken. BUD shares were hit pretty hard again today thanks to a downgrade stemming from the beer-maker’s recent gaffe.
In simplest terms, last week, Anheuser Busch Inbev was called out for what some critics say was an irresponsible marketing message printed on its bottles. As part of its popular “Up for whatever” campaign, BUD printed “The perfect beer for removing ‘no’ from your vocabulary for the night.” Some observers felt this indirectly endorsed rape.
Anheuser Busch has since apologized for the message, pointing out it was never intended to be interpreted as such. The damage to BUD, however, has already been done. Credit Agricole downgraded BUD all the way from an outperform to an underperform, fanning the bearish flames.
Thanks to today’s 2% tumble, the stock is down nearly 5% since last Monday, when the critics of the bottle’s slogan started to clamor. It should be noted, however, that BUD shares were already fragile at the time.
Abercrombie & Fitch (ANF)
Anheuser Busch wasn’t the only name to be up-ended by a downgrade on Monday. Shares of Abercrombie & Fitch were off 3% thanks to new analyst coverage from RBC Capital. The problem? RBC began its coverage by rating ANF as an underperform.
While RBC Capital didn’t explicitly say so, the research outfit is likely concerned about Abercrombie & Fitch’s new marketing message. Gone is the sexualization of, well … pretty much everything the company does. The concern from the market and RBC Capital may be that over-the-top sexualization might have been the best (and maybe only) thing working in the company’s favor.
CSX Corporation (CSX)
As it turns out, CSX Corporation isn’t going to be pegged as a buyout target by hedge fund manager Bill Ackman today at the Ira Sohn conference in New York. The surprised market sent CSX shares more than 2% lower on the news, after sending it up 17% over the past three weeks in anticipation that Ackman was looking for consolidation in the railroad space and was looking at CSX Corporation as the industry’s lowest hanging fruit.
Of course, it’s not as if that news was the only news that left CSX ripe for a pullback. Competitor Norfolk Southern Corp. (NYSE:NSC) recently posted weaker year-over-year profit numbers, while Union Pacific Corporation (NYSE:UNP) came up short of its first quarter earnings estimates.
Until and unless there is some consolidation in the railroad space, CSX could be more of a liability than an asset.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
