In yet another daily 180-degree turnaround, the bulls put a quick end to the downtrend that took shape on Wednesday to log a solid 1.83% gain for the S&P 500 today, closing at 1948.86. The gain materialized in spite of a somewhat disappointing payroll-growth report from Automatic Data Processing that indicated that the nation added 190,000 new jobs last month.
Not every stock made forward progress on Wednesday, however. In fact, Ambarella Inc (NASDAQ:AMBA), Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) and Dollar Tree, Inc. (NASDAQ:DLTR) all took sizeable hits. Here’s why.
Dollar Tree (DLTR)
One would have thought the near-9% drubbing Dollar Tree shares suffered after a disappointing earnings report and outlook Tuesday would have been all the damage DLTR was due. One would have been wrong in coming to that conclusion, however. Dollar Tree stock fell another 3% today following a big downgrade.
Cantor Fitzgerald did the bulk of the deed today, lowering its price target on DLTR from $95 to $90 per share. Feltl & Company followed suit, lowering its stance on Dollar Tree from a “strong buy” to just a “buy.”
That being said, Jefferies analyst Daniel Binder may have served up the most meaningful assessment of Dollar Tree in the wake of Tuesday’s earnings news, pointing out that the short-term disruptions don’t change the long-term opportunity DLTR has now that it has pulled Family Dollar under its umbrella.
Ambarella (AMBA)
Ambarella, which makes the technology found inside the so-called action cameras made by GoPro Inc (NASDAQ:GPRO), did pretty well last quarter, but investors’ hopes were dashed after the company offered guidance that suggested its growth was slowing.
For its second quarter, the company earned 88 cents per share of AMBA on $84.2 million in revenue. The pros were only expecting a profit of 80 cents per share of AMBA stock and sales of $81.7 million.
The stock took a 9% hit, however, when it offered lackluster Q3 guidance.
For the current quarter, Ambaralla is looking for revenue of between $90 million and $93 million, versus average expectations of $92.3 million. That’s in line with outlooks, but for a stock like AMBA which is plagued by expectations of outsized performance, “in line” still isn’t good enough.
Ariad Pharmaceuticals (ARIA)
Last but not least, biopharma company Ariad Pharmaceuticals isn’t going to be acquired by Baxalta Inc (NYSE:BXLT) after all.
The two companies had been in talks for some time, but after a stalemate regarding the acquisition price, those talks broke down and no plans have been made to rekindle them in the future.
The buzz is that ARIA has been looking for a suitor for a while now, and allegedly aiming for a price of more than $1.8 billion. With Baxalta abruptly walking away after serving up what some believe may have been the best offer Ariad Pharmaceuticals is going to get for a while, though, frustrated ARIA shareholders sent the stock 17% lower.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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