It may have been a shaky start for stocks on Friday, spurred by the unveiling of a surprisingly weak inflation rate. The bulls were able to turn things around fairly quickly though, and decisively. The S&P 500 finished Friday up 1.3%.
Not every stock caught a tailwind, though. SolarCity Corp (SCTY), Precision Castparts Corp. (PCP) and Regal Entertainment Group (RGC) finished the day in the red despite the bullish tide. Here’s why:
SolarCity Corp (SCTY)
By all accounts, SolarCity shares should be soaring. The company continues to expand its homeowner rooftop-installation efforts, it’s now working with homebuilders in certain East Coast markets, and analysts continue to love it. In fact, Canaccord Genuity analyst Josh Baribeau just yesterday wrote:
“We remain confident in SolarCity’s momentum, as the midpoint to the Q4 guide still indicates 80% year-over-year growth, and the company continues to expect a near doubling in its installations again in 2015.”
Baribeau, however, didn’t raise his price target on SCTY stock. In fact, he lowered it, from $87 to $64, though he does still consider it a buy. Worried — and slightly confused — SolarCity shareholders watched SCTY stock lose more than 2% of its value on Friday.
Precision Castparts Corp. (PCP)
Precision Castparts shareholders might want to temper their expectations of the company’s Q3 results. Rather than the expected revenue of $3.4 billion, Precision Castparts now only expects a top line of less than $2.5 billion. Similarly, the pros has been collectively expecting a profit of $3.41 per share of PCP stock. It’s only apt to roll in between $3.05 and $3.10. The company said weak demand from its oil and gas customers.
When all was said and done, PCP stock fell more than 9% today.
Regal Entertainment Group (RGC)
Regal Entertainment has decided not to sell itself to another cinema company, much to the chagrin of shareholders. RGC stock fell more than 5% following Thursday evening’s announcement.
The company first brought the idea up in October, even hiring Morgan Stanley to help it determine its best options. When all was said and done, though, the board of directors felt none of its M&A options would boost shareholder value.
The decision didn’t likely do much to help analysts’ perception of Regal Entertainment, which struggled with weak box office sales in the middle of last year, crimping earnings. One of the ideal ways to fight narrowing margins is consolidation with competitors, which doesn’t appear to be in the cards any longer.
JPMorgan Chase & Co. lowered its price target on RGC stock earlier in the month, and Stifel downgraded the stock from a buy to a hold earlier in the week. Any lingering optimism Stifel or JPMorgan had, however, may have been based on an assumption that a merger or acquisition was looming.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
