After finishing last week on a high note, the stock market hit a bump as energy stocks declined and crude oil prices fell. The S&P 500 had an early-week slump, dropping 0.2% Monday. The Dow Jones Industrial Average experienced a 0.2% dip as well.
A number of companies posted their quarterly earnings reports Monday, including Express Scripts Holding Company (NASDAQ:ESRX) and Nabors Industries Ltd. (NYSE:NBR). But Tuesday’s biggest mover might be Sarepta Therapeutics Inc (NASDAQ:SRPT), which looks to plummet a day after its shares were halted.
Here’s what you need to know heading into Tuesday’s trading.
Sarepta Therapeutics Inc (SRPT)
Sarepta Therapeutics was set to be cleaved nearly in half on Monday morning following an advisory committee meeting concerning its drug, eteplirsen. The committee was reviewing Sarepta’s new drug application to use eteplirsen to treat the rare condition, Duchenne muscular dystrophy.
The review involved a pair of votes that clipped Sarepta’s hopes. Per a release last night:
“The advisory committee voted 6-7 against the finding of substantial evidence from adequate and well controlled studies that show that eteplirsen induces production of dystrophin to a level that is reasonably likely to predict clinical benefit (FDA Question #2). The advisory committee voted 3-7, with three abstentions, against finding substantial evidence based on the clinical results of the single historically controlled study (Study 201/202) that eteplirsen is effective for treatment of DMD (FDA Question #7).”
A positive vote would have meant a recommendation to allow eteplirsen to go on sale in the U.S. Without the recommendation, the chances look poor that the FDA will approve the drug when it makes a ruling on eteplirsen on May 26.
As a result, analysts began to slash price estimates on SRPT, including RBC Capital ($7.50 down to $5) and Piper Jaffray ($15 down to $6).
Sarepta to SRPT shares were halted all of Monday pending the findings of the committee. The stock will resume trading today, and at last check, shares were off 47%.
Knowles Corp (KN)
Knowles’ fiscal first-quarter earnings were well ahead of analysts’ expectations, sending KN shares surging Monday afternoon.
The electronics manufacturer reported earnings per diluted share of 8 cents, while the Wall Street estimate predicted less than half of the company’s quarterly profit at 3 cents per diluted share.
Analysts also underestimated Knowles’ revenue for the quarter, with a projection of $179.6 million, missing the company’s reported revenue of $185.3 million.
The company’s electronics segment excelled in its most recent period, as did its specialty components segment.
KN shares were up 25% in Tuesday’s premarket trading, more than reversing a substantial 9% decline in Monday’s action.
Express Scripts Holding (ESRX)
Express Scripts reported lower-than-expected revenue for its first quarter Monday night, and that’s taking a toll in ESRX shares.
The consensus estimate called for revenue of $25.2 billion, but the company fell short of this projection, posting $24.79 billion — a year-over-year decline, too — for the period.
Express Scripts did surpass Wall Street predictions for its quarterly earnings with its 81 cents per share, and posted a second-quarter earnings outlook of $1.55 to $1.59 per share, which was in line with Wall Street estimates for $1.57 per share.
But the substance was in the sales, if investors’ initial reaction is to be believed. ESRX shares are off 2.4% this morning.
As of this writing, Karl Utermohlen did not hold a position in any of the aforementioned securities.
