Despite news that this month’s consumer sentiment is measurably lower than February’s confidence reading, the buyers managed to top off another bullish week with another Friday advance. Today’s close of 2049.56 for the S&P 500 was up 0.44% from Thursday’s closing level, and 1.3% higher than the previous week’s final price.
Not every name was able to get in on the bullish action, however. National-Oilwell Varco, Inc. (NYSE:NOV), Paypal Holdings Inc (NASDAQ:PYPL) and TerraForm Power Inc (NASDAQ:TERP) finished the session in the red, but for understandable reasons.
Here’s the deal.
National-Oilwell Varco, Inc. (NOV)
National-Oilwell Varco wasn’t the only energy name to tank today, nor did it dish out the biggest loss. Between the volume behind the selling, the 4% pullback, and the sheer size of the company though, NOV arguably dished out the most pain.
At the heart of that pain were a string of calls for the current oil rally to rollover, with the most recent — and likely the most damning — being the one from iiTrader chief market strategist Bill Baruch suggesting crude could fall from its current price above $40 to as low as $32 again. Baruch’s expectation echoes something Oil Price Information Service’s Tom Kloza also said on Friday:
“We may get two weeks where it looks as though we’re starting to rebalance — we’re not … I think the second quarter looks still very, very sloppy. We could see prices anywhere from $30 to just short of $45 — I don’t think we’re going to close above $45.”
Paypal Holdings Inc (PYPL)
Paypal Holdings wasn’t absolutely thrashed on Friday, but the 1.3% tumble from PYPL was sizable enough to make shareholders sweat, especially considering the reason for the weakness.
Research outfit Stifel gets the bulk of the blame for today’s pullback, lowering its opinion on PayPal from “Buy” to a “Hold.” It wasn’t that the company was headed into stormy weather, however, that prodded the shifting stance.
PYPL shares simply neared Stifel’s target price of $40, and Stifel’s analysts simply suggested taking profits.
Analyst Scott Devitt explained:
“With half of shopping experiences starting on mobile devices One Touch should continue to reduce shopping cart abandonment and benefit merchant partners. We are positive on the trends thus far but believe that shares reflect the potential positive impact to TPV growth.”
TerraForm Power Inc (TERP)
Last but not least, TerraForm Power shares lost more than 4% of their value today, translating into a full-week loss of 18%.
There was no specific reason that surfaced today that up-ended TERP. Rather, the setback was simply an extension of the selloff that got started earlier in the week when partner company Sunedison Inc (NYSE:SUNE) came under fire for failing to report its quarterly results on time.
The two organizations go hand in hand, and have a common fate. TerraForm Power buys solar power projects developed by Sunedison for the purpose of turning them into dividend-paying yieldcos. The model doesn’t work because the solar power simply lacks the profitability it needs right now to make the arrangement viable.
The fact that a handful of law firms are now scrutinizing TerraForm Power for potential securities fraud, also explains why TERP never really had a chance today.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
