Stoked by healthy levels of producer inflation and better-than-expected industrial activity last month, the bulls hit the ground running today and never looked back. The S&P 500 ended the session at 1926.82, up 1.65%.
It wasn’t a winning day for all stocks, though. Groupon Inc (NASDAQ:GRPN), Cerner Corporation (NASDAQ:CERN) and Southern Copper Corp (NYSE:SCCO) each used more than their fair share of red ink. Here’s the deal.
Cerner Corporation (CERN)
Healthcare IT company Cerner Corporation saw its shares plunge to the tune of 4.8% on Wednesday, leading the laggards among the market’s large caps. The culprit? It wasn’t last quarter’s results. Rather, it was guidance for the current quarter that up-ended CERN.
In the fourth quarter of last year, Cerner earned 61 cents per share on sales of $1.18 billion. The bottom line topped estimates of 57 cents per share. Although the top line technically missed estimates, they were very, very close to the market’s target… close enough to call a “met.”
That good news, however, was unwound when the company unveiled its Q1 outlook. Cerner is now looking for income between 52 and 54 cents per share of CERN for the first quarter of this year, and revenue between $1.15 billion and $1.2 billion. Both are up from the year-ago levels, but both stretch the average outlook from analysts. Perhaps more alarmingly, those outlooks represent a slowing growth rate.
The numbers were weak enough to prompt a downgrade from Evercore ISI, which now deems CERN a Hold, versus a previous rating of Buy. Evercore also lowered its target on Cerner shares to $68.00 apiece.
Southern Copper Corp (SCCO)
Cerner Corporation wasn’t the only name to be driven lower by earnings-related downgrades on Wednesday. Southern Copper suffered a similar fate at the hands of JP Morgan.
Last quarter, Southern Copper earned eight cents per share on revenue of $1.25 billion. Analysts had modeled sales of $1.24 billion, but were also calling for earnings of 19 cents per share of SCCO.
Total copper production amounted to 742,993 tons last year, which was a new record. But, with copper prices reaching proverbial rock-bottom levels as 2015 came to a close, sales and profitability suffered. But, despite weak copper prices, Southern Copper remains confident enough in a rebound that it plans to ramp up its output again in 2016… by more than 20%. Analysts aren’t as confident as the company is, however. JPMorgan lowered its opinion of SCCO from an overweight to a neutral stance, helping to send shares down more than 3% today.
Groupon Inc (GRPN)
Last, but not least, just one day after soaring more than 40%, Groupon shares fell more than 7%, as the profit-takers dug in and the knee-jerk buyers started to rethink things.
The news was sparked by an official report from Chinese e-commerce name Alibaba Group Holding Ltd (NYSE:BABA), which disclosed that it had taken a 5% stake in GRPN. Without even really knowing why, traders intuitively assumed it was a positive sign for Groupon. With the dust settling, however, the market is starting to remember Groupon is still struggling, and won’t easily be salvaged by Alibaba.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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