The Federal Reserve’s decision to stand pat with its tentative plan to raise interest rates later this year wasn’t what investors wanted to hear. Shortly after the FOMC news was announced, stocks gave up solid early gains AND ended up closing down about a full percentage point.
Gentex Corporation (NASDAQ:GNTX), AOL, Inc. (NYSE:AOL) and Open Text Corporation (NASDAQ:OTEX) found themselves at the very bottom of the barrel, losing far more ground than stocks as a whole did. Here’s what investors will want to know.
Through the end of Tuesday, AOL appeared to be in an uptrend. The rug got pulled out from underneath shares today, however, when Wells Fargo downgraded AOL stock from an “outperform” to a “market-perform.” The analytical firm now says AOL stock is worth somewhere between $49 to $51 per share, whereas before the downgrade Wells Fargo deemed AOL to be worth something between $55 and $57 per share.
The timing of the downgrade came as something of a surprise, in that the struggling web company is finally willing to restructure itself, shut down its sites that just aren’t working, and making some progress in the ad-sales front.
AOL stock fell nearly 9% today.
Gentex Corporation (GNTX)
Shares of auto parts maker Gentex Corporation fell nearly 6% on Wednesday following a disappointing Q4 earning report. The company earned 24 cents per share of GNTX stock versus estimates of 26 cents and a per-share profit of 24 cents in the comparable quarter a year earlier. The fourth quarter revenue figure of $350.4 million fell short of analyst estimates of $367.8 million, but topped the year-ago tally of $326.77 million.
Some recent changes were largely blamed for the tepid results. CEO Fred Bauer said of last quarter’s results:
“It’s an exciting time for Gentex as we introduce new innovative products and processes into manufacturing and expand our capabilities for future growth. However, occasionally with product innovation comes complexity. In the fourth quarter, we saw some of the challenges of that increased complexity manifest itself in the form of increased manufacturing costs.”
Open Text Corporation (OTEX)
After Open Text Corporation reported mixed results after the close on Tuesday, investors sent shares sharply lower on Wednesday — spurred by a subsequent downgrade of OTEX.
Business software company Open Text managed to top its fiscal second quarter earnings estimates, posting a bottom line of $1.00 per share of OTEX versus expectations of only 97 cents. Revenue of $468 million, though, was shy of estimates for a top line of $487 million.
The bulk of the reason OTEX stock tumbled almost 10% today, however, is the downgrade from Credit Suisse. The analytical outfit lowered its rating on Open Text from outperform to neutral, and now believes OTEX stock is only worth $60 per share versus a previous target of $65. The core of the concern from Credit Suisse was a lack of organic growth.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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