Why Vale SA (VALE), Lululemon Athletica Inc. (LULU) and AbbVie Inc. (ABBV) Are 3 of Today’s Worst Stocks

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The new trading week didn’t get started on a particularly bullish foot, mostly stemming from reports of lackluster Black Friday spending and doubts that the shopping lull was offset on Cyber Monday. By the time the closing bell rang, the S&P 500 had fallen 0.46% to 2,080.41.

Why AbbVie Inc. (ABBV), Lululemon Athletica Inc. (LULU) and Vale SA (VALE) Are 3 of Today's Worst StocksIt could have been worse, though, and for owners of Vale SA (NYSE:VALE), Lululemon Athletica Inc. (NASDAQ:LULU) and AbbVie Inc. (NYSE:ABBV), it was a lot worse. Here’s what went wrong for each on Monday.

Vale SA (VALE)

The concern was raised two weeks ago when a dam burst in Brazil — at a mine operated by Vale SA — and killed at least 13 people and created an environmental nightmare. The concern became reality today, however, when it was announced that the Brazilian government would indeed be suing mining company Vale for its part in the deadly dam break.

The lawsuit is demanding $5.2 billion, which would be used to clean up the affected area, which may have also dumped arsenic in the affected area near the town of Mariana. For perspective, Vale generated $23.2 billion worth of revenue over the past 12 months, but lost $4.27 billion.

VALE shares closed more than 5% lower on the news.

Lululemon Athletica (LULU)

Always-dramatic athletic apparel maker Lululemon Athletica saw its stock stumble on Monday, with LULU shares falling a hefty 9%. The tripwire was a downgrade from research outfit FBR & Co. FBR analyst Susan Anderson explained:

“While we believe TG/BF sales were very strong, our checks showed most people buying the significant amounts of clearance available in stores. As a result, we lower our 4Q15 GM estimate to -290 bps (from -20 bps and consensus at -69 bps) and our 2016 gross margin to +22 bps (consensus of +180 bps). We also lower our EPS estimates: for 4Q15 to $0.76 (from $0.86), 2015 to $1.80 (from $1.90), and 2016 to $2.13 (from $2.29).”

The commentary accompanied the dropped rating, from a market-perform to an underperform. FBR also dropped its target price on HULU from $55 to $42.

AbbVie (ABBV)

Last but not least, in the grand scheme of things AbbVie investors had to know it was coming sooner or later. They sure weren’t expecting today to be the day, though, judging from the 3% hit ABBV shares took following today’s news.

Amgen, Inc. (NASDAQ:AMGN) is seeking the FDA’s approval of a biosimilar to AbbVie’s best-selling drug, Humira, which is a treatment for a variety of conditions.

It’s a big deal. Humira sales reached $3.69 billion last quarter for ABBV, or 62% of the company’s top line of $5.9 billion in its third quarter. Although not as cheap as non-biologic generic drugs, the introduction of a Humira biosimilar could still significantly pinch sales of the branded version of the drug.

AbbVie still has a few ways it could combat the introduction of Amgen’s version of the popular rheumatoid arthritis drug, but ABBV shareholders aren’t particularly optimistic.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/abbvie-inc-abbv-lululemon-athletica-inc-lulu-vale-sa-vale-3-todays-worst-stocks/.

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