Tuesday could end up being a weak day for U.S. markets as traders and investors come back from their holiday weekend. Futures on the major U.S. indices are heading lower, which would be a disappointment following the S&P 500’s quick break over the 2,100 mark last Friday.
Among the companies that could lead the market lower today are Bank of America Corp (NYSE:BAC), Netflix, Inc. (NASDAQ:NFLX) and Illumina, Inc. (NASDAQ:ILMN).
Here’s a look at what’s keeping these stocks down today:
Bank of America Corp (BAC)
BAC stock looks set to extend its losses from last Friday after Oppenheimer cut Bank of America’s price target along with other U.S. banks.
Oppenheimer analysts have cut their expected PT on Bank of America from $20 to $18 as part of a slashing that also saw Citigroup Inc (NYSE:C) dropped from $70 to $63 and Goldman Sachs Group Inc (NYSE:GS) cut from $243 to $214.
BAC recently passed the Fed’s stress test, receiving a green light to increase its dividend by 50% to 7.5 cents per share, as well as to buy back $5 billion in shares over the next year.
BofA shares are off more than 1% in Tuesday’s premarket trading.
Netflix, Inc. (NFLX)
NFLX shares were also sliding on Tuesday after Needham & Company downgraded the company’s stock.
According to analyst Laura Martin, the firm is worried about the Brexit will cause GDP growth deceleration in the U.K. and European Union over the next year to two years, which in turn could hold back Netflix’s subscriber growth and/or increase its churn.
Also, the EU courts are a concern. Martin writes:
“Separately, in May, the EU proposed legal changes that would force NFLX to fund European-made films, implying higher costs and lower ROICs as local content often does not travel well globally. If NFLX chooses to exit certain EU markets to avoid these requirements, this would slow international subscriber growth.”
This all led Needham to lower NFLX shares from “Buy” to “Hold,” as well as lower its estimates for the second half of this year and for full-year 2017.
Illumina, Inc. (ILMN)
ILMN stock will start Tuesday’s trading down a few percentage points amid a downgrade from Morgan Stanley.
Morgan lowered Illumina from “Equal Weight” to “Underweight” with a price target of $110, which is more than 20% downside from Friday’s closing price.
ILMN has been in a steady decline since mid-2015 that has seen shares lose about 40% of their value. Of particular worry this year was an April warning on 2016 first-quarter revenues — thanks to weak sales on its HiSeq 2500, 3000 and 4000 gene sequencing instruments. For the current quarter, analysts are expecting moderate growth of just less than 10% in revenues.
Illumina’s next earnings report is expected come after the bell on Tuesday, July 19.
As of this writing, Karl Utermohlen did not hold a position in any of the aforementioned securities.
