Inspired by the Federal Reserve’s unexpected confidence in the global market today (complete with a lingering possibility of a December rate hike) stocks rallied nicely. By the time the closing bell rang, the S&P 500 was at 2,090.35, up 1.18%.
It wasn’t a winning day for all stocks, however. Walgreens Boots Alliance Inc (NASDAQ:WBA), Gilead Sciences, Inc. (NASDAQ:GILD) and Akamai Technologies, Inc. (NASDAQ:AKAM) all used more than their fair share of red ink. Here’s what went wrong.
Akamai Technologies, Inc. (AKAM)
Seemingly range-bound since March but testing the waters of higher highs, shareholders of Akamai Technologies were blindsided today when AKAM plunged 17% following a pair of major downgrades in response to its release of Q3 results that were less than hoped.
Cowen was one of the naysayers, downgrading the company to “market-perform” from an “outperform” and lowering its target price on AKAM from $75 to $70. Analyst Colby Synesael specifically cited a “lack of visibility” as a key reason for the lowered opinion. Canaccord also lowered its stance on AKAM from a “buy” to a “hold.”
Although Akamai Technologies managed to top third-quarter estimates for its top and bottom lines, its fourth-quarter earnings outlook was disappointing. The company foresees a profit of between 60 cents and 64 cents per share for Q4, while analysts were collectively calling for earnings of 65 cents per share of AKAM.
Walgreens Boots Alliance Inc (WBA)
Just one day after the market was cheering Walgreens Boots Alliance — via a 6% advance from WBA — for its decision to acquire Rite Aid Corporation (NYSE:RAD), the market was jeering the idea on Wednesday after another reality regarding the company’s future came to light.
All told, WBA fell 11% today after the company offered a revised full-year profit outlook that was less than initially suggested. Rather than a range of $4.25 to $4.60 per share, Walgreens Boots Alliance now believes it’s only going to earn between $4.25 and $4.55 per share in fiscal 2016. Though the new number only lowers the top end of a relatively wide range by a nickel, that new range puts tremendous pressure on the consensus profit estimate of $4.54 per share of WBA.
Walgreens Boots Alliance sees income growth stabilizing after that, but the market wasn’t impressed.
Gilead Sciences, Inc. (GILD)
This biopharma company may have managed to top its third-quarter estimates, but the price tags of its ballyhooed hepatitis C drug are weighing in on trailing and future results.
All told, Gilead earned $3.06 per share on $8.3 billion in revenue, versus expectations for a profit of only $2.90 per share of GILD and a top line of $7.8 billion.
That wasn’t enough, however, as sales of hep-C drugs Sovaldi and Harvoni were both flat with Q2’s levels. The company said it didn’t expect to see growth from either through 2016, sending GILD shares lower to the tune of 2.5% on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
