The market may have gotten the week started on a bullish foot Monday, but that effort fizzled rather quickly. Despite a 4.6% increase in January’s Case-Shiller Home Price Index and a consumer confidence score that’s back near multi-year peak levels, the S&P 500 tumbled 0.9% close at 2067.
It was even worse for a handful of stocks. Take Science Applications International Corp (NYSE:SAIC), Pilgrim’s Pride Corporation (NASDAQ:PPC) and Celgene Corporation (NASDAQ:CELG) for example. These three names were the worst of the worst on Tuesday, for a variety of reasons.
Pilgrim’s Pride (PPC)
Nothing new popped up to work against Pilgrim’s Pride shares today. Rather, the selloff of PPC continues to be fueled by a growing pile of worry that the market can’t process fast enough. PPC stock lost 3.2% today.
The tumble started back on March 11th when bird flu was detected at a poultry farm in Arkansas. On March 14th, avian flu was found in Kansas. Since fears of bird flu can deter consumers from buying chicken, the potential adverse impact on Pilgrim’s Pride is clear. In the meantime, news that the USDA was expecting a 9% increase in chicken supplies this year sparked concerns that margins would be crimped for PPC in the foreseeable future.
The death blow may have come this past weekend, when yet another case of bird flu was discovered in Minnesota. While consumers may have been willing to overlook one or even two cases, a third domestic instance of avian flu might just cause consumers to seriously reign in their chicken consumption until it’s clear the situation is under control. That could take weeks.
All told, today’s 3.2% tumble from PPC stock translates into more than a 17% loss in March alone.
Science Applications International (SAIC)
The good news is, IT consulting company Science Applications International topped earnings estimates in the fourth quarter, and revenues were better than expected too. The bad news is, SAIC stock slumped nearly 8% anyway, because nobody cared how well Science Applications International did last quarter.
The specifics: For the quarter ending at the end of January, the company earned 75 cents per share of SAIC versus an average estimate of 71 cents. Science Applications International also turned in a top line of $952 million, beating forecasts for $936 million in sales.
Given the stock’s 40% rally over the past 12 months and lack of clear reason for today’s stumble, it’s likely traders headed into the earnings announcement with a “buy the rumor, sell the news” mindset and were likely to shed SAIC en masse no matter what Q4’s results looked like.
Up until today, Celgene investors probably thought the legal winds were blowing in their favor. As of today though — judging from the 4% pullback CELG doled out on some concerning comments — the stock market isn’t so sure.
Prodding the pullback were worries about Revlimid, a therapy for blood cancer, including multiple myeloma and mantle cell lymphoma. In simplest terms, CELG may not have patent protection on Revlimid in Europe for as long as previously thought. Citigroup’s Yaron Werber expounded on the worries to Celgene investors on Tuesday regarding an upcoming hearing on the matter:
“The most likely outcome is revocation of the patent while the second most likely outcome is that the patent will be narrowed to remove any protection for the anhydrous polymorph form A. Either way this will drastically limit the patent protection for Revlimid for myeloma in Europe beyond June 2022.”
Investors, understandably, were scared off by that comment and sold off in droves.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.