Still worried about weakness that materialized earlier this week, and less than impressed by April’s dwindling PMI reading, stocks started and finished the last trading day of the week and the month in the red. The S&P 500‘s close of 2065.30 was 0.51% lower than Thursday’s close, and the Nasdaq’s setback left it below some key technical support lines.
Here’s a closer look at what went wrong with each.
Gilead Sciences, Inc. (GILD)
Gilead Sciences shares lost 9% of their value on the final trading day of the week, once again in response to disappointing quarterly numbers.
Recently sitting on top of the world thanks to significant growth in sales of its high-priced hepatitis C drug Harvoni, GILD was knocked off that perch today when the company reported Harvoni sales had actually fallen from $3.58 billion in the same quarter a year earlier to only $3.02 billion for the first quarter of 2016.
That lull ultimately led to only modest income and revenue growth. Per-share profits of $2.98 were slightly better than the year-ago bottom line of $2.90 per share, but fell short of the profit of $3.03 per share of GILD analysts had been calling for. Revenue grew 2.6% on a year-over-year basis, to $7.79 billion, but still missed expectations of $8.13 billion.
Stericycle Inc (SRCL)
While most stocks were in the red today, none from the large cap realm were as underwater as that of waste-disposal specialist Stericycle. SRCL shares were down more than 21% on Friday after posting disappointing Q1 numbers Thursday afternoon, and underscoring that bad news with lowered full-year guidance.
Last quarter, Stericycle earned $1.11 per share on revenue of $874.2 million. The top line was better than the expected $873.6 million, but the bottom line fell short of estimates for earnings of $1.15. Looking ahead, Stericycle expects to earn a profit of somewhere between $4.90 and $5.05 this year, down from previous guidance between $5.26 to $5.33 per share of SRCL.
The outlook was reeled in after the company extended a rollout schedule of an initiative that would ultimately lead to a cost savings. That bad news prompted a handful of downgrades of SRCL, fanning the bearish flames.
Western Digital Corp (WDC)
Last but not least, Stericycle wasn’t the only name to get hit hard by a poor earnings announcement today. Disk-drive maker Western Digital was also up-ended after failing to meet its third fiscal quarter estimates.
After Thursday’s close, Western Digital reported earnings of $1.21 per share for the previous quarter, on $2.82 billion worth of revenue. Analysts, however, were expecting a profit of $1.29 per share and sales of $2.86 billion. Total revenue was down 24% on a year-over-year basis as well, and there were no particular bright spots for the company.
Sterne Agee CRT analyst Robert Chira opined:
“SSDs continue to cannibalize PCs but also now rapidly replace 10/15K performance-optimized HDDs in traditional arrays (even higher performance for random IOPS), leaving 7200-rpm nearline HDDs the remaining workhorse for CAPACITY. While we see that dynamic even helping demand for nearline HDDs (where WDC leads w/ sealed Helium) that continue to offer by far the lowest-cost storage economics (just ~3c/GB or still >8X cheaper than flash), the transition is disruptive. Moreover, we believe that even while their low $/GB keeps HDDs not only relevant but the vast majority of ultimate storage capacity for a long time (we est >80% in 2016E), SSDs likely keep the HDD market from ever getting back to growing units, pressures revs and profit growth even as mix shifts to high-price/margin enterprise.”
WDC ended the day down 11%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.