Another convictionless day on Thursday, with the early session rally fading later in the day when investors could find little to latch onto as a reason to remain bullish. By the time the closing bell rang, the S&P 500 had fallen back to 2,052.23, closing only 0.23% above Wednesday’s final level.
Banco Bradesco SA (BBD)
Another day, another losing session for a Brazilian stock. This time it was Banco Bradesco SA leading the charge, with BBD shares losing nearly 8% of their value following news that the country may see its credit rating cut by Moody’s.
The ratings agency has already cut its rating of Brazilian oil company Petroleo Brasileiro SA Petrobras (NYSE:PBR) — better known as Petrobras — on Wednesday, to Ba2, which pushes the company’s credit score a little deeper into the “speculative” strata. With the entire country teetering on the verge of major fiscal turmoil, though, all of its stocks including BBD pose unusually high risk.
Several other Brazilian stocks took hits today on a countrywide potential downgrade of the nation’s credit-worthiness, but BBD was the biggest loser.
First Solar, Inc. (FSLR)
In light of all the trouble Sunedison Inc. (NYSE:SUNE) has been facing simply because the solar power business isn’t panning out as profitably as it was expected to, it shouldn’t be surprising that First Solar is hitting a similar headwind. Yet, the 8% hit FSLR shares took today after the company posted a tepid outlook for the coming year confirms the market was indeed surprised to hear the company isn’t thriving.
For fiscal 2016, First Solar only foresees gross margins in the range of 16% to 18%. The company had been expecting gross profits of between 24% and 25%, while analysts were looking for gross profits of 18.5%.
In spite of the weak outlook, Janney Montgomery analyst Michael Gaugler remains optimistic, responding after the outlook was posted on Wednesday evening:
“We’re not sure why the shares sold off 7% yesterday in after hours trading, but we’ve noted that some solar and energy stocks have traded to what we consider extreme levels recently. Deviations from expectations seem to be magnified, and yesterday’s after hours activity would appear to be another representation of that phenomena. There’s plenty to like in FSLR’s guidance, including earnings and the anticipated 2016 YE net cash balance of $2.0B to $2.3B. We stress that this is initial guidance; an upward revision at some point in 2016 would not surprise us.”
Ciena Corporation (CIEN)
The good news is, networking equipment maker Ciena Corporation turned a profit last quarter for the first time in seven years. The bad news is, it wasn’t enough to satisfy CIEN investors, who were more worried about the disappointing revenue guidance for the coming year. All told, Ciena reported a profit of 42 cents per share on revenue of $692 million last quarter. Both topped expectations for a profit of 38 cents per share of CIEN and sales of $683.6 million, and both were well ahead of year-ago comparisons.
Yet, the revenue growth of 8% to 9% projected for 2016 fell short of the 14% growth analysts were projecting. The current quarter’s expected sales figure of between $555 million and $590 million also fell well short of the $638 million analysts were calling for.
CIEN shares fell 17% on Thursday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.