It was a back and forth battle for the bulls and bears today, with a couple of different swings into and out of the black. When all was said and done though, the bulls won the day … barely. The S&P 500‘s close of 2169.18 was 0.03% better than Monday’s closing level.
Not every stock got a reprieve on Tuesday, however. Gilead Sciences, Inc. (NASDAQ:GILD), Mobileye NV (NYSE:MBLY) and Under Armour Inc (NYSE:UA) were battered and bruised more than any other names, albeit for understandable reasons.
Here’s the deal.
Gilead Sciences, Inc. (GILD)
In the grand scheme of things, Gilead Sciences didn’t report horrifying Q2 numbers. They sure weren’t inspiring results though, setting up a sizable 8.5% plunge from GILD in the aftermath.
Biopharma outfit Gilead Sciences told investors after Monday’s closing bell rang that it had earned $3.08 per share on revenue of $7.78 billion. The bottom line was better than the expected profit of $3.01 per share of GILD, though the top line missed estimates of $7.85 billion.
Given the numbers to-date, Gilead lowered its full-year revenue guidance from a range of $30 billion to $31 billion to a range of $29.5 billion to $30.5 billion. A slowdown in the sales growth rate of its hepatitis C drug portfolio is the core reason for the contracted guidance.
The news prompted downgrades, fanning the bearish flames on Tuesday. Needham, for instance, downgraded GILD from a “Buy” to a “Hold,” while Piper Jaffray cut its target price on the stock from $114 to $108.
Mobileye NV (MBLY)
Although the actual value of the relationship was never entirely certain, Mobileye NV shareholders aren’t happy about the company’s decision to part ways with Tesla Motors Inc (NASDAQ:TSLA) so it can focus on fully autonomous driving.
The semi-self-driving (“driver assist“) feature found on the Tesla Model S largely relies on hardware and technology supplied by Mobileye, which offers a variety of safety and autonomous driving tools to several automobile manufacturers.
But, the technology employed by Tesla is a mix of its own as well as Mobileye’s know-how. While it’s a high-profile accolade to be chosen the biggest name in electric cars, following the death of a Tesla owner that implicated the driver-assist feature, Mobileye decided it would be better off in the long run by not partnering on such technologies. Rather, it should build complete systems, and as such have complete control of how the technology functions.
The 8% slide MBLY dished out today says shareholders don’t see it the same way.
Under Armour Inc (UA)
Last but not least, for proof that investors can never blindly assume anything, despite the 28% increase in revenue last quarter, earnings of 1 cent per share of UA still missed estimates for a profit of 3 cents per share.
Blame retailer Sports Authority for the letdown. Sports Authority’s bankruptcy-related liquidation sales shaved 3 cents worth of profit from the UA bottom line in Q2, though that adverse impact has lingered into Q3 as well.
Even though the Sports Authority headwind will pass, analysts remain concerned about Under Amour’s efficiency and profitability measures. Raymond James analysts Dan Wewer and Mitch Ingles offer their take:
“Under Armour’s 2Q financial results and lack of increase in FY16 guidance supports our Market Perform rating. Under Armour’s strength in revenues confirms the company’s market share expansion is broad based; however we remain concerned with the company’s: 1) slowing cash conversion cycle; 2) slower U.S. wholesale growth; 3) EBIT margin pressure from growing sales contribution from footwear/international, as well as infrastructure investments.”
Jim Cramer summed it up succinctly by saying, “What they’re spending to get sales is too high.”
UA shares ended the day down 5.1%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
