The bulls certainly didn’t start the new trading week on the same bullish foot they left last week on. With nothing inspirational to cue another round of buying, the S&P 500 peeled back 0.09%, closing at 2180.89.
It could have been worse, though, and for owners of Allergan plc Ordinary Shares (NYSE:AGN), AMN Healthcare Services, Inc. (NYSE:AHS) and Bristol-Myers Squibb Co (NYSE:BMY), it was worse. These names dished out the most bearish pain on Monday.
Here’s why.
Allergan plc Ordinary Shares (AGN)
Allergan used more than its fair share of red ink on Monday, losing ground after its Q2 earnings report and subsequently lowered guidance.
Last quarter, Allergan earned (operating) $3.35 per share of AGN on revenue of $3.7 billion. The bottom line was better than analysts’ expectations, but the top line missed estimates. Worse, Allergan forecasts it will drive branded drug revenue of between $14.75 billion to $15 billion this year versus prior guidance of $15 billion. The company also now foresees earnings of between $13.75 and $14.20 per share for 2016, coming up just short of analysts’ estimates of $14.21 per share of AGN.
AGN ended the day down 2%.
AMN Healthcare Services, Inc. (AHS)
AMN Healthcare Services logged its second day of strong selling on Monday, adding to Friday’s 4% pullback with an 8% dip today. Unlike BMY though, AMN Healthcare Services didn’t disappoint on the research and development front. Rather, it topped expectations for quarterly earnings of 52 cents with earnings of 61 cents per share. Revenue of $473.7 million was considerably stronger than the anticipated $453.7 million.
So why an 11% pullback since the beat? Chalk it up to the “buy the rumor, sell the news” phenomenon. Exacerbating that effect on AHS is the fact that the stock was up a hefty 90% since February’s low and the day before earnings, setting up a great deal of profit-taking potential.
Bristol-Myers Squibb Co (BMY)
Last but not least, shares of drugmaker Bristol-Myers Squibb led the bearish parade, but the reason was the same in both cases — BMY shareholders were still rattled by Friday’s news that one of the company’s much-ballyhooed cancer drugs didn’t work as well as anticipated.
The drug in question is called Opdivo. It has already been approved as a treatment for other cancers. But, in late-stage trails as a therapy for non-small cell lung cancer, it didn’t meet its endpoint.
Fanning the bearish flames today was a downgrade of BMY from Credit Suisse. Analyst Vamil Divan noted:
“While we are not fans of reacting to news, Friday’s developments are too significant and surprising for us to maintain our bullish stance on Bristol-Myers. We remain bullish on the I-O market overall and still have robust I-O franchise estimates for Bristol-Myers, with ~$8.5Bn in 2020 and >$10Bn in 2023, driving operating margins up from 23% in 2015 to 36% in 2023. Given how leveraged Bristol-Myers is to I-O, however, even these rather bullish estimates still give us a DCF valuation of $61, making it very difficult for us to continue recommending the stock at this time.”
Today’s 5% pullback from BMY translates into a 19% plunge for the past two trading days.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
