With little reason to start buying stocks again, investors left behind another bearish day … the fourth in a row, with this one being the most devastating of the four.
All told, the S&P 500 ended the day down 1.07%, closing at 2,079.65. Traders were reportedly lightening up in front of next week’s decision from the Federal Reserve regarding an interest rate hike, though broader concerns about economic slowdowns in the U.S. as well as China also weighed in.
Leading the bearish charge were Biogen Inc. (NASDAQ:BIIB),Capital One Financial Corp. (NYSE:COF) and Tripadvisor Inc. (NASDAQ:TRIP). Here’s where each went wrong.
Biogen (BIIB)
For the second time this week, biopharma company Biogen has earned a spot on the daily “Worst 3”, though for completely unrelated reasons. Both were pretty ugly setbacks for BIIB, but today’s was a far uglier rout of 22%.
As it turns out, Biogen isn’t going to sell as much of its multiple sclerosis drug — Tecfidera — this year as it first thought it would. After growing 63% on a year-over-year basis in the first quarter, Tecfidera’s growth rate fell to 26% in the second quarter. The slowdown forced the company to lower its full-year profit guidance to a range of between $15.50 and $15.95 per share of BIIB. Previously it was anticipating earnings between $16.60 and $17.00 per share.
The bad news followed Wednesday’s announcement that its experimental Alzheimer’s drug aducanumab (BIIB-037) didn’t create a statistically significant improvement in cognitive functioning.
Between today’s plunge and Wednesday’s drubbing, BIIB lost 25% of its value this week.
Capital One Financial (COF)
It wasn’t so much the disappointing second quarter earnings that up-ended Capital One Financial on Friday. It was the subsequent downgrades that did ended up doing the bulk Friday’s damage to COF shares.
Last quarter, credit-card lender Capital One Financial earned $1.78 per share on $5.67 billion in sales. Both numbers missed estimates. Analysts were looking for a profit of $1.97 per share COF on sales of $5.74 billion.
Less than 24 hours after Thursday evening’s earnings report, Wells Fargo, Goldman Sachs, and JP Morgan all downgraded COF from bullish ratings to neutral ones.
COF shares fell 13% for today’s trading session.
Tripadvisor (TRIP)
Online travel agent Tripadvisor grew its business last quarter, but the cost of that growth may have been too great for most TRIP owners, who sent the stock lower to the tune of 13%.
Revenue grew 25% on a year-over-year basis last quarter for Tripadvisor, to $405 million. But the company spent heavily on advertising while simultaneously discounting its rates to fend off competition. When all was said and done, the company saw a stunning 46% increase in its second-quarter expenses. The end result was earnings that fell well short of estimates. The company posted a profit of 54 cents per share of TRIP, missing analyst estimates by a penny.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
