With July’s employment growth rolling in tepidly and investors unsure of what that may mean in terms of the timing of the next interest rate hike, traders took the safer path and continued to let go of stocks. Though it rebounded a bit later in the session, the S&P 500 still finished the day down 0.29%, at 2,077.57.
It could have been worse, though … and it was worse for owners of ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Sprouts Farmers Market Inc. (NASDAQ:SFM) and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), which all fell by double-digits on Friday, mostly spurred by downgrades.
Alnylam Pharmaceuticals (ALNY)
Biotech stock Alnylam Pharmaceuticals led Friday’s bearish charge following a disappointing second quarter report and a subsequent downgrade of ALNY. Specifically, in Q2 the company lost 85 cents per share on $8.65 million worth of revenue. Unfortunately, analysts were collectively looking for a loss of only 75 cents per share and $14.6 million worth of sales.
The numbers were bad enough to prompt a downgrade from JP Morgan. The banks lowered its opinion on Alnylam Pharmaceuticals from an overweight to neutral, and simultaneously lowered its price target on ALNY from $125.00 to $115.00.
ALNY finished the day down more than 11%.
Acadia Pharmaceuticals (ACAD)
Alnylam Pharmaceuticals wasn’t the only biotech name to wake up on the wrong side of the bed on Friday. Acadia Pharmaceuticals also took a big hit, to the tune of more than 13%. Unlike ALNY though, it wasn’t earnings that did the deed. It was a downgrade from Piper Jaffrey.
Piper Jaffrey analyst Charles Duncan, in simplest terms, has doubts about the company’s near-term prospects heading into the new drug application (with the FDA) for Nuplazid, the treatment for psychosis associated with Parkinson’s disease. Specifically, Duncan believes ACAD lacks the necessary funding to launch the drug.
Duncan added that Acadia Pharmaceuticals wasn’t widely being viewed as a potential acquisition target, which indirectly suggests would-be buyers are fearful the FDA may end up not liking some of the data the phase 3 study of Nuplazid produced.
Sprouts Farmers Market (SFM)
Last but not least, organic grocer Sprouts Farmers Market saw its stock stumble nearly 12% on Friday after a disappointing second quarter printed a wave of downgrades for SFM.
Earnings and sales were actually more than palatable. Analysts were only expecting a profit of 22 cents per share on $893.5 million in sales, and the company earned 22 cents per share of SFM and drove $902.2 million in revenue.
Though year-over-year growth was plenty decent, analysts were concerned enough to downgrade SFM in the wake of the report. BB&T Capital Markets lowered its rating from a “buy” to a “hold.” Deutsche Bank didn’t lower its hold rating on Sprouts Farmers Market, but it did lower its price target on SFM from $27 to $20. Deutsche Bank’s analyst said, “In our view, deflation in produce precipitated a more aggressive promotional environment and Sprouts Farmers Market reacted accordingly.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
