The day started out strong, but as time passed, the bullishness faded and the bears dug in. By the time the closing bell rang, the S&P 500 had slipped into the red, closing down 0.17% at 2338.17. Still, that wasn’t enough to drag the index under its key support level of 2,329.
It was much worse for some names though. Namely, Diana Shipping Inc. (NYSE:DSX), Rite Aid Corporation (NYSE:RAD) and International Business Machines Corp. (NYSE:IBM) dished out the most pain to most shareholders in the wake of concerning news. Here’s what traders needs to know.
International Business Machines Corp. (IBM)
Will the misery ever end for IBM?
After Tuesday’s closing bell rang, ol’ Big Blue reported a 20th straight quarter of declining revenue. The first fiscal quarter’s bottom line of $2.38 per share was better than the expected profit of $2.35 per share — the same amount IBM earned in the comparable quarter from a year earlier. But, with yet-another year-over-year dip in sales and a top line tally of $18.2 billion that came up short of the estimated $18.37 billion, the 4.9% hit IBM shares took today comes as no surprise.
Fanning those bearish flames were a couple of key cuts in price targets. RBC Capital lowered its target on IBM from $185 to $180, and DrexelHamilton’s Brian White cut his price target on the stock from $215 to $200.
Comments from other analysts didn’t help either. Jefferies’ James Kisner effectively summed up the bearish thesis by saying:
“The results reinforce our view that IBM’s recently poor earning quality masks ongoing secular headwinds that will likely result in disappointment for investors … These results reinforce our longer-term view that IBM faces secular challenges in Software business and competitive pressures in Services that are underappreciated by investors.”
Rite Aid Corporation (RAD)
In the grand scheme of things, RAD owners should almost be numb to any news regarding the intended acquisition of Rite Aid Corporation by Walgreens Boots Alliance Inc (NASDAQ:WBA). The announcement was made back in October of 2015, but every possible stumbling block that could delay the consummation of the deal in the meantime seems to have been bumped into, save one … a decision from the Federal Trade Commission to outright sue in an effort to prevent the deal from happening.
Now that stumbling block appears to have been hit as well.
It has not been confirmed yet by the FTC (in the form of legal paperwork), but Bloomberg reported today that the government watchdog is indeed considering filing a lawsuit to bar the pairing of the two drug-store giants.
RAD fell 8.7% on the news. It’s now down 52% from its early January high.
Diana Shipping Inc. (DSX)
Last but not least, dry bulk maritime shipper Diana Shipping punished its shareholders on Wednesday, with DSX losing 11.5% of its value. The prod? The company is issuing new shares that will dilute the existing DSX float.
All told, Diana Shipping will be issuing $70 million worth of common stock, though the underwriter has the right to purchase an additional $10.5 million worth of shares. That’s a sizable chunk relative to the company’s current market cap of $385.3 million.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.