Stocks finished the calendar month on a high note despite an unexpectedly low Chicago PMI score for September. The S&P 500 closed at 1920.03, up 1.91%.
With relatively modest volume behind the move, though, it’s possible today’s buying activity was nothing more than a little quarter-end window-dressing.
Nobody was dressing any windows with Gap Inc (NYSE:GPS), Barracuda Networks Inc (NYSE:CUDA) and American Airlines Group Inc (NASDAQ:AAL), though. These three stocks were the worst of the worst. Here’s the deal:
Gap Inc (GPS)
The last thing shareholders of Gap needed to see today was more bad news. As of yesterday’s close, GPS shares were down more than 30% from March’s peak, and still stuck in a downtrend. But, more bad news is what they got, sending GPS down another 5%.
The bad news? Old Navy (a Gap company) global brand president Stefan Larsson had been recruited to work for Ralph Lauren Corp (NYSE:RL), where he’ll succeed founder Ralph Lauren as CEO.
It’s a blow Gap didn’t need, materializing at a time Gap didn’t need it. Not only is Larsson largely the reason Old Navy fought its way back to relevancy after he took that helm back in 2012, but the all-important holiday shopping season — when veteran leadership comes in handy — is just around the corner.
American Airlines Group Inc (AAL)
American Airlines Group’s bonds may be a tad safer than they were yesterday, but AAL stock is worth a little less than it was worth on Tuesday.
So say the pros, anyway.
On Wednesday, Moody’s upgraded American Airlines’ creditworthiness, boosting its rating on the airline’s class A tranche of its Series 2001-1 Enhanced Equipment Trust Certificates (EETCs) from B1 to Ba3. Its class B and C tranche ratings remained at Caa2.
In the end, though, a slightly safer sliver of the company’s debt-profile wasn’t enough to stave off a downgrade of the stock. Goldman Sachs lowered its opinion on AAL from “buy” to “neutral,” and simultaneously lowered its target price for the stock from $48 to $44. Goldman Sachs analyst Tim Kim was particularly concerned about the company’s exposure to the flailing Latin American market.
AAL closed down 1%.
Barracuda Networks Inc (CUDA)
Last but not least, computer networking and security company Barracuda Networks saw its stock fall a jaw-dropping 34% on Wednesday after posting disappointing sales in its previous quarter and even more disappointing billings. The news started a chain reaction of downgrades for CUDA.
Last quarter, Barracuda Networks operationally turned a profit of 10 cents per share on $78.4 million in revenue. The top line was up 14% on a year-over-year basis, and the bottom line was stronger than the eight cents per share for the comparable quarter a year earlier. Earnings also topped expectations of nine cents. Revenue, however, just missed estimates of $78.7 million,
The real trouble for CUDA shares, though, was prompted by tepid billing. Not only did the company only report $98.4 million in gross billings versus expectations of $102.5 million for its second fiscal quarter, Barracuda Networks lowered its gross-billing outlook for the current year from a range between 16% and 18% to a range of only 10% to 13%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
