Tuesday was a down day for stocks, but nobody took it on the chin as hard as Valeant Pharmaceuticals, Inc. (NYSE:VRX), which went into complete free fall. Overall, though, it was a small-movement day, as the S&P 500 finished down 0.2% at Tuesday’s close, while the Dow Jones Industrial climbed 0.1%.
That said, Valeant’s move was so violent that it bears watching on Wednesday, as is another food company that could be moving in the same direction: Chipotle Mexican Grill, Inc. (NYSE:CMG). On a more positive note, Oracle Corporation (NYSE:ORCL) had some good news to share ahead of hump day.
Here’s what you need to know heading into Wednesday’s trading:
Valeant Pharmaceuticals Intl Inc (VRX)
Billionaire investor Bill Ackman might have been heard whimpering a little on Tuesday after he lost more than $1 billion in one day thanks to Valeant’s stunning decline of more than 51% at yesterday’s close. He and his hedge fund Pershing Square plan on taking “a much more proactive role at the company to protect and maximize the value of our investment,” Ackman said.
The cause? Valeant updated its financial expectations for the fourth quarter, and they … well, they weren’t good.
The numbers: VRX expects $2.3 billion to $2.4 billion in revenues for Q4, as well as annual sales of $11 billion to $11.2 billion. Those numbers were revised down from quarterly revenue expectations of $2.8 billion to $3.1 billion and annual figures of $12.5 billion to $12.7 billion. Q4 earnings projections were also knocked down to a range of $1.30 to $1.55 per share, from $2.35 to $2.55.
The pharmaceutical company revised its expectations due to underwhelming sales of its gastrointestinal medications, which came at the heels of Valeant switching its medication distribution system from a specialty pharmacy to Walgreens Boots Alliance Inc (NASDAQ:WBA).
In addition to that, the company indicated it was at risk of defaulting on its bonds.
Despite the bloodshed in VRX in Tuesday’s trading, VRX continued to trend downward in Wednesday’s premarket action.
Chipotle Mexican Grill, Inc. (CMG)
Not that anyone thought the burrito chain’s woes were over in the first quarter, but Chipotle confirmed investors’ fears by stating that it might suffer a loss of $1 per share “or worse” for the period.
The projected losses are continued fallout from various health concerns from 2015, including an E. coli outbreak that led to dozens of restaurants closing, as well as a chain-wide closure to train its employees on the health risks.
Chipotle also took a step backwards this year as an employee in a Massachusetts location tested positive for norovirus, while several other workers also fell ill.
CMG already suffered a harsh fourth quarter, but shares have actually recovered quite well for the year-to-date, up about 5% for the year-to-date.
Most of that could be erased, however, with shares off some 6% in Wednesday’s premarket trading.
Oracle Corporation (ORCL)
The software developer was booming late Tuesday as it posted third-quarter earnings of 64 cents per share on revenue of $9.01 billion. Both figures beat the Street, as Wall Street analysts estimated EPS of 66 cents and revenue of $9.12 billion for the quarter.
Additionally, Oracle announced that it is launching a $10 billion share buyback program.
The company’s cloud business has been specially hot, accounting for $583 million in sales for the quarter. However, Oracle is still banking on its software business as its main source of revenue, at 71%.
ORCL shares were set to open Wednesday up 4%, which would help add to a 6% rally for the year-to-date.
