Why Sprint Corp (S), Johnson & Johnson (JNJ) and International Business Machines Corp. (IBM) Are 3 of Today’s Worst Stocks

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The bulls logged a pretty good day on the heels of the expected consumer inflation report for September. By the time the closing bell rang, the S&P 500 was at 2139.6, up 0.62%. Unfortunately, that wasn’t enough to get the index above a major technical hurdle at 2145.

Why Sprint Corp (S), Johnson & Johnson (JNJ) and International Business Machines Corp. (IBM) Are 3 of Today's Worst StocksThat was still better than the results dished out by Johnson & Johnson (NYSE:JNJ), International Business Machines Corp. (NYSE:IBM) and Sprint Corp (NYSE:S) on Tuesday, however. These three names slumped rather deep into the red, but for understandable reasons.

Here’s the deal.

Sprint Corp (S)

In late July, Sprint shares soared on news that the wireless carrier would finally be paring back its compelling but expensive offers to cut customers’ phone bills if they would switch from another carrier. Now the downside of doing so is rearing its ugly head. S shares fell 1% on heavy volume today following a preliminary fiscal Q2 report that left shareholders wanting more.

The top line is expected to look better, up 3% from year-ago numbers thanks to a wide swath of new customers that signed on for a better deal. The year-ago loss of $585 million was whittled down to a loss of only $142 million. The company even added a total of 740,000 subscribers last quarter, exceeding expectations.

When all was said and done though, for as much as Sprint has done and suffered, S shareholders were expecting better.

International Business Machines Corp. (IBM)

Whether International Business Machines beat last quarter’s earnings estimates depends on who you ask.

In its third quarter of the year, Big Blue earned $3.29 per share on revenue of $19.23 billion. Analysts were only calling for a top line of $19.01 billion and a profit of $3.21 per share of IBM stock. For the first time in eighteen quarters of deteriorating numbers, sales and income were almost flat on a year-over-year basis.

Not everyone thinks the company’s worst days are behind it though. As Credit Suisse analyst Kulbinder Garcha explained, “The results were again helped by non-operational measures, which we find concerning… The underlying EPS that IBM generated operationally was essentially $2.87, 11% below expectations” when stripping out the benefit of a lower tax rate and income from its intellectual property portfolio.

IBM ended the day down 2.6%.

Johnson & Johnson (JNJ)

Finally, Johnson & Johnson ended the day 2.6% in the red, not because it did anything wrong, but because rival Pfizer Inc. (NYSE:PFE) did something right.

Late Monday, pharmaceutical giant Pfizer announced it would begin shipments of Inflectra in mid-November. Inflectra is a biosimilar version of Remicade, made by Johnson & Johnson, and will sell at a lower price than Remicade currently does. It’s a particular problem for JNJ, as Remicade is not only a $5 billion annual franchise, but it’s also Johnson & Johnson’s biggest seller.

The matter isn’t entirely settled just yet, however. JNJ intends to continue fighting a legal battle that invalidated a key patent on Remicade and opened the door to the generic version from Pfizer.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/why-sprint-corp-s-johnson-johnson-jnj-and-international-business-machines-corp-ibm-are-3-of-todays-worst-stocks/.

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