Stocks may have started the new trading week out on a bullish foot, but it didn’t take long for the market to slip deep into the red, driven by another setback for crude oil and lingering concerns over China’s economy. And yet, the bulls never gave up. By the time the session ended, the S&P 500 squeezed out a tiny gain of 0.09%, closing at 1923.67.
It was even worse for McKesson Corporation (NYSE:MCK), Celgene Corporation (NASDAQ:CELG) and Under Armour Inc (NYSE:UA), however. Here’s why these three names never even had a chance on Monday.
Celgene Corporation (CELG)
Biopharma company Celgene Corporation doesn’t expect to live up to expectations for 2015, casting a shadow of doubt on 2016’s lackluster outlook.
Per this weekend’s discussion at the J.P. Morgan Healthcare Conference, the company reported it anticipates posting Q4 income of $1.18 per share of CELG, versus analyst estimates of $1.30. For all of 2015, the top and bottom line should roll in at $6.16 billion and $4.71 per share, respectively. For comparison, pros were collectively looking for $9.23 billion and $4.83 per share of CELG.
On a full-year basis, the 2016 profit outlook of $5.50-$5.70 barely eclipses the average target of $5.68. Sales are also going to come up a little shy of estimates.
Fanning the bearish flames that sent CELG more than 5% lower was news that CEO Bob Hugin will be stepping down in March and will be replaced by Mark Alles.
Under Armour Inc (UA)
Under Armour, once one of the market’s most beloved plays, continues to fall from its perch. Today’s dip was one of the strongest single-day selloffs to date for UA, inspired by a downgrade that seems to suggest the athletic apparel maker’s best days are behind it.
Morgan Stanley did the deed, downgrading UA from equal weight to underweight and lowering its target price on UA to $62 from $103.
Analyst Jay Sole explained:
“Recent SportScan data shows Under Armour is losing market share for the first time in 3 years in apparel and, more surprisingly, ASPs are falling at an accelerating pace. Both trends are more pronounced in women’s apparel, despite major marketing investment in this division last year. Though warm weather surely explains some of this, we think Under Armour may be reaching maturity in US apparel faster than previously thought.”
The market took that ball and ran with it, sending UA shares 7% lower.
McKesson Corporation (MCK)
Last but not least, McKesson Corporation led the bearish charge Monday, with MCK losing a whopping 10% of its value following lowered guidance for fiscal 2016.
Blame Walgreens Boots Alliance Inc (NASDAQ:WBA) and Rite Aid Corporation (NYSE:RAD) for the setback, mostly. Rite Aid is slated to be acquired by Walgreens, and as such is presumed to be adopting the existing relationship Walgreens Boots Alliance has with AmerisourceBergen Corp. (NYSE:ABC), a rival to McKesson. Rite Aid currently sources many of its drugs through McKesson.
The precise impact, if any, remains unclear, but McKesson narrowed its per-share profit outlook for 2016 from a range of $12.50-$13.00 to a new range of $12.60-$12.90 per share of MCK. Investors were hoping for a higher upper-end of the range.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
