U.S. stock markets lagged once again on Wednesday as the Federal Reserve did exactly what was expected of it — it left interest rates intact. After an initial bump higher, the broader indices slid into the close, with the S&P 500 off 0.2% by day’s end and the Dow Jones Industrial Average down 0.2%.
Here’s how these stocks were affected ahead of today’s action:
Cavium Inc (CAVM)
QLogic provides networking infrastructure, and will be rolled into Cavium, which produces semiconductor processors for wireless networking and communications, among other things. All told, the duo will boast Dell, International Business Machines Corp. (NYSE:IBM) and Oracle Corporation (NYSE:ORCL) among their higher-profile customers, according to ZDNet.
The deal values QLGC at $15.50 per share — a roughly 11% premium from Wednesday’s closing price.
CAVM shareholders didn’t seem too happy with the deal, potentially because Cavium is spending roughly $940 million in cash to purchase a company when it has just $135 million in cash and short-term investments.
CAVM was off 14% in Thursday’s premarket action.
Rite Aid Corporation (RAD)
RAD stock was trending downward Thursday morning after disappointing Wall Street analysts on both the top and bottom lines.
Rite Aid dipped to a loss of $4.6 million for its fiscal first quarter, down from an $18.8 million profit in the year-ago period. That came on revenues that grew 23% to $8.18 billion, which fell short of Street expectations for $8.24 billion. On an adjusted basis, earnings of 1 cent fell way short of estimates for 5 cents per share.
Comps were miserable too, at 0.4% versus estimates of 2.8%.
Rite Aid, already slightly off for the year-to-date, is sinking by about 1% or 2% in Thursday’s premarket trade.
Yahoo! Inc. (YHOO)
YHOO shares were being nudged higher after Citigroup analyst Mark May (thankfully not this Mark May) gave Yahoo a nod, saying the company is generating a “more compelling risk/reward” situation.
May upgraded YHOO stock from “neutral” to “buy” and lifted his price target to $43 from $38, so about 13% upside from here.
In particular, May believes Yahoo is trading at a discount to the value of both the company itself, as well as its stakes in Yahoo Japan and, of course, Alibaba Group Holding Ltd (NYSE:BABA). May thinks Yahoo will be sold, for at least $5 billion, and that there’s an implied discount of 30% to 35% in Alibaba and Yahoo Japan holdings.
Best-case, he sees 23% upside for Yahoo (at $46 per share).
YHOO was up fractionally before the bell.
As of this writing, Karl Utermohlen did not hold a position in any of the aforementioned securities.