For a while today, it looked like the bulls were going to regroup after yesterday’s lull and finally punch through a key technical and psychological ceiling. The buyers could never get the ball rolling, however, letting stocks slip into the red as the closing bell approached. The S&P 500 closed at 2059.74, down 0.2%.
It could have been worse, however — you could have owned Allergan plc Ordinary Shares (NYSE:AGN), Deere & Company (NYSE:DE) or Micron Technology, Inc. (NASDAQ:MU). These three names led Thursday’s bearish charge.
Here’s the deal.
Allergan plc Ordinary Shares (AGN)
In retrospect, the fact that Allergan is falling out of favor with analysts can’t come as a complete surprise. The pending merger with Pfizer Inc. (NYSE:PFE) has raised too many red flags for regulators, who are fearful that any such pairing just has the mere potential to send certain drug prices soaring. On the heels of the unexpected approval delays that up-ended one of the key arguments for owning AGN, the stock was sent more than 2% lower on Thursday. It’s down 14% year-to-date, mostly for the same reason.
Fanning the bearish flames today was a lowered target price on AGN from Canaccord Genuity. Although Canaccord still says Allergan is a “Buy”, ongoing problems pose a threat to all specialty drugmakers. Its price target on AGN was lowered from $340 per share to $320.
Deere & Company (DE)
Don’t look for anything specific Deere & Company said or did on Thursday to explain the near 4% setback DE shares suffered. Instead, blame irrigation company Lindsay Corporation (NYSE:LNN), which up-ended Deere & Company along with several other agricultural stocks with its cautious commentary delivered with its fiscal second quarter results this morning.
The alarm that spooked DE shareholders:
“We are now in the midst of the primary selling season for irrigation equipment in North America. While we have seen signs of stabilization, the market continues to reflect reductions from peak periods in farmers’ investments in equipment due to the lowest projected net farm income since 2002.”
Investors understandably assumed the tightened purse strings, and making things tough on Lindsay is also crimping other farm equipment purchases.
Micron Technology, Inc. (MU)
Last but not least, while Q1’s earnings season hasn’t officially begun yet, unofficially it’s underway, and Micron Technology was one of the first to report … unfortunately.
Last quarter — its fiscal Q2 — Micron Technology lost five cents per share on sales of $2.93 billion. The pros were calling for a loss of 9 cents per share, but were also looking for a top line of $3.27 billion. More alarmingly, revenue was down 30% on a year-over-year basis thanks to an outright implosion in DRAM demand. The outlook for the current quarter was similarly ugly, coming up well short of analysts’ outlooks.
The news prompted a small wave of downgrades for MU, including one from Macquarie Research that cut right to the heart of the matter. Along with a lowered rating of “Neutral”, from a “Buy”, Macquarie cautioned it doesn’t see any meaningful upside catalysts in the cards for Micron Technology for the next few quarters.
MU ended up closing only a bit lower for the session, though it was down as much as 4.5% at one point, and most of the day’s trades on the stock transpired toward the low end of the day’s range.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
