Things were finally rolling well in the bulls’ favor on Wednesday, right up until the point when the Federal Reserve’s most recent Open Market Committee minutes were released. That’s when traders learned the odds of a rate hike were and presumably are a little higher than recently assumed and paused for a moment; a June hike remains a distinct possibility. Nevertheless, the buyers were able to regroup later in the session, with the S&P 500 closing at 2066.66, up 1.05%.
Not every name escaped the grips of bearish claws on Wednesday, however. Cree, Inc. (NASDAQ:CREE), Harley-Davidson Inc (NYSE:HOG) and Wynn Resorts, Limited (NASDAQ:WYNN) all dipped rather deep into the red ink, mostly based on outlooks.
Here’s the deal.
Cree, Inc. (CREE)
Looks like the global paradigm shift away from incandescent and CFL light bulbs to LED light bulbs isn’t quite bearing as much fruit as some expected it would by now. LED lighting manufacturer Cree warned investors after the close on Tuesday that its fiscal Q3 revenue wouldn’t be as strong as previously suggested.
Per Tuesday evening’s announcement, Cree is now looking for a third-quarter top line of $367 million, down from a prior outlook of between $400 million and $430 million. As for earnings, Cree is now looking for a bottom line of between 13 cents and 15 cents per share, down from a previous expectation for a profit of 22 to 29 cents per share.
Observers noted competition from General Electric Company (NYSE:GE) as one of the headwinds, and Cree itself reported supply constraints as a headache. The market wasn’t sympathetic though, sending CREE shares nearly 15% lower.
Harley-Davidson Inc (HOG)
Cree wasn’t the only outfit to find itself on the wrong side of mounting competition today. Motorcycle manufacturer Harley-Davidson was also the victim of a slashed analyst outlook stemming from waning market share.
ITG Investment Research did the deed, lowering its first-quarter sales outlook for Harley-Davidson by three percentage points, translating into an expectation for a decline of between 5% and 7% on a year-over-year basis.
ITG analysts opined:
“Additionally, after relatively stable market share in the first two months of the quarter, Harley-Davidson appeared to lose market share at an accelerated pace [year-over-year] in March, resulting in an overall market share decline in the first quarter.”
Research outfit Longbow chimed in with a similar message about Harley-Davidson, pointing out that Polaris Industries Inc. (NYSE:PII) — which makes similar Indian brand motorbikes — does indeed appear to be stealing some of Harley’s business.
HOG ended the day down more than 7%.
Wynn Resorts, Limited (WYNN)
Last but not least, Wynn Resorts shares fell a little more than 1.5% on Wednesday, not because of anything the company did or said, but because of yet another dreary outlook.
Giving credit where it’s due, Wynn Resorts seems to finally be past the adverse impact of regulatory headwinds in Macau. The casino company pre-reported last quarter’s revenue, suggesting it would officially report between $603 million and $613 million worth of Macau-driven revenue for the prior quarter. Analysts were only expecting an average of $592 million.
The market just couldn’t get past the more concerning parts of last night’s preview, however. Namely, Macau’s revenue for the quarter in question will still be down by double digits, and its Las Vegas revenue may or may not be any better than the year-ago comparison. At best, it will top the comparable quarter’s Las Vegas revenue by less than 2%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
