The Federal Reserve salvaged what would have been a fairly lousy day for the market, hinting that it was in no particular hurry to raise rates, nor was it interested in pushing rates up to stifling levels. Relieved investors pushed the S&P 500 up 1.22% to a close of 2099.50.
Not every stock out there participated in the Fed-induced rally, though. Virgin America Inc. (NASDAQ:VA), Adobe Systems Incorporated (NASDAQ:ADBE) and Nektar Therapeutics (NASDAQ:NKTR) were noteworthy losers. Here’s why.
Adobe Systems (ADBE)
The subscription-based “Creative Cloud” service offered by Adobe Systems isn’t enrolling users as quickly as had been expected, and the market isn’t happy about it.
Adobe Systems reported on Tuesday evening that its Creative Cloud product’s user base only grew by 517,000 last quarter, versus expectations for a total increase in the subscriber base of 580,000.
Weakness on that front further prompted the company to lower its estimates for the second quarter. Adobe Systems is now expecting revenue of somewhere between $1.125 billion and $1.175 billion in the current quarter, versus a consensus forecast of $1.18 billion. The company further expects a per-share profit of somewhere between 41 cents and 47 cents for the current quarter, versus analyst expectations of 48 cents.
Disappointed investors let ADBE fall more than 3% in the wake of the news.
Nektar Therapeutics (NKTR)
Though it wasn’t absolutely everything to the company, breast cancer drug NKTR-102 was the foundation for the future biopharma company Nektar Therapeutics. Its failure to achieve its goals in a critical phase 3 trial sent NKTR shares careening, to the tune of 11%.
All things considered, though, it could have been worse.
NKTR-102 “worked,” in the sense that patients using the drug lived an average of 2.1 months longer than the study’s breast cancer patients not using the treatment lived. But, the Hazard Ratio that indicates statistical significance of any measurable benefit was not strong enough to consider the trial a success.
Nektar Therapeutics plans on performing a deeper review of the trial’s data to look for situations where it may provide a statistically significant benefit.
Virgin America (VA)
The good news: Another analytics firm — Credit Suisse — has noticed Virgin America is worth initiating coverage on. The bad news: Credit Suisse isn’t impressed by Virgin America. Credit Suisse has deemed Virgin America an “underperform” right out of the gate, suggesting that VA shares are only worth $31 apiece.
At the heart of the concern is a network of routes that are vulnerable to competition, and the fact that other carriers are growing better as well as controlling costs better than Virgin America is.
Taking the words true to heart, investors sent VA down nearly 7% today, to multi-month low close of $32.12.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
