Why Goldcorp Inc. (GG), Credit Suisse Group AG (CS) and Community Health Systems (CYH) Are 3 of Today’s Worst Stocks

Traders came back from the long weekend in a bullish mood, building on the bullishness that was put into motion on Friday of last week; it’s looking more and more like last week’s lows are the second leg in a double-bottom pattern. The S&P 500 ended the session at 1895.57, up 1.65%.

Why Goldcorp Inc. (GG), Credit Suisse Group AG (CS) and Community Health Systems (CYH) are 3 of Today's Worst StocksNot every stock was able to ride Tuesday’s bullish wave, however. Goldcorp Inc. (NYSE:GG), Community Health Systems (NYSE:CYH) and Credit Suisse Group AG (NYSE:CS) still managed to dip into the red ink. Here’s why.

Goldcorp Inc. (GG)

Goldcorp may have been the day’s biggest loser from the realm of major stocks, but it was hardly alone in its pullback. Peers and competitors Barrick Gold Corporation (NYSE:ABX) and Newmont Mining Corp (NYSE:NEM) weren’t far behind the 5.4% loss GG suffered on Tuesday, with each losing a similar degree of their value today.

Part of the pullback from Goldcorp was driven by a downgrade from CIBC, which lowered its opinion on GG from a “Sector outperform” to only a “Sector perform.”

The bulk of the selling GG, ABX, NEM and all of their peers suffered on Tuesday was, however, mostly spurred by a sizeable turn for the worst from gold prices. After soaring 19% between mid-December and last week, today’s 27% lull in the price of gold is being treated as a warning that gold prices are once again retreating. Falling gold prices hit gold miners particularly hard.

Credit Suisse Group AG (CS)

Just when it looked like Credit Suisse Group AG shares had finally hit bottom after a 57% pullback from July’s highs, the bears dug in again today, sending CS down a little more than 2%, and nipping a rebound effort in the bud.

The bulk of the weakness was the result of a downgrade of CS shares by JPMorgan Chase. The investment bank and brokerage firm is concerned that fixed income, as well as equity-driven revenue, will fall at double-digit paces.

JPMorgan analyst Kian Abouhossein noted with the downgrade, “…we see earnings at risk in a challenging credit trading environment, low level of deal flow and lower equity markets…. We fail to see positive risk reward in Credit Suisse due to negative operating leverage in the current environment,” in reference to the likelihood that Credit Suisse Group’s fixed income business is overly-reliant on credit markets.

Community Health Systems (CYH)

Last, but not least, Community Health Systems shares lost a whopping 22% of their value today… a pullback started by poor fourth-quarter results, then exacerbated by downgrades of CYH.

Last quarter, hospital network Community Health Systems earned an operating profit of 39 cents per share on revenue of $4.8 billion. Analysts, however, were expecting a profit of 95 cents per share of CYH and a top line of $4.91 billion. The company said fewer ER visits and a mild flu season were the culrpits, but because this was the second earnings miss for the company, analysts were neither impressed nor sympathetic.

Jeffries, for instance, responded to the numbers by saying:

“Compounding this overhang is a general aversion toward levered names in the current market environment and a broad-based correction in hospital valuations that we believe will prevent Community Health shares from bouncing back meaningfully near-term.”

Jeffries went on to downgrade CYH to a “Hold,” lowering its price target from $18.00 to $8.00.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/why-goldcorp-inc-gg-credit-suisse-group-ag-cs-and-community-health-systems-cyh-are-3-of-todays-worst-stocks/.

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