Following through on yesterday’s intraday reversal effort, the bulls were decidedly in charge of Wednesday’s trading heading into the afternoon rate-hike decision from the Federal Reserve. Once Janet Yellen came across a little too dovish though, surprised investors turned tail, leading the S&P 500 to a loss of 0.18% for the day. The index closed at 2071.50, back under a key technical support level.
Here’s what went wrong for each.
Bob Evans Farms Inc (BOBE)
Bob Evans Farms shares fell over 9% today for an all-too-familiar reason: disappointing guidance.
Its recently completed fourth quarter was decent. Earnings of 48 cents per share of BOBE topped estimates of 43 cents, and revenue of $345.6 million just edged expectations for a top line of $345.3 million. However, its full-year earnings guidance rolled in between $2.00 and $2.15 per share though, versus average analyst estimates for income of $2.19 per share in fiscal 2017.
Perrigo Company plc Ordinary Shares (PRGO)
Calling a spade a spade, Raymond James analysts Elliot Wilbur and David Su have a good point — for all the chatter surrounding Perrigo Company and its potential acquisition, little of it has been substantiated … even by mere rumor standards.
The buzz of that possibility started in earnest in mid-May. Following a horrifying 18% one-day plunge in late April to top off a multi-month pullback of more than 50%, PRGO shares started a rebound move that would carry it as much as 22% higher than its mid-May lows. The prod? The assumption of an acquisition, which became much more credible on Tuesday with this report.
Problem? Raymond James’ Su and Wilbur may have said it best:
“We remain of the opinion that there are few natural buyers for Perrigo. In terms of potential strategic fit, we would argue that Mylan (MYL) was probably the closest thing to a natural buyer of Perrigo though with that company’s announced purchase of Meda and recent acquisition of Renaissance to attack the generic dermatology segment, the chances of a return bid for Perrigo post shares recent collapse seems increasingly unlikely.”
PRGO shares fell 9% following the reality check.
Whole Foods Market, Inc. (WFM)
Last but not least, Whole Foods Market just can’t catch a break. Just when it looks like WFM might finally be able to pick itself up by its bootstraps as May turned into June, another batch of bad news comes along to pull the rug out from underneath it.
The selloff had already picked up speed headed into Monday’s close, making WFM an easy target on Tuesday morning when news broke that one of its food-preparation facilities has a leaky roof. Horrific? No, but it is certainly embarrassing for a company that desperately needs to impress consumers right now.
The FDA’s citation for a leaking room was only the beginning though. Later on Tuesday and early on Wednesday — when the rest of the report had time to propagate — Whole Foods Market shareholders learned that the same inspection was far more serious than mere roof repair. The same facility had tested positive for listeria … a dangerous food-borne bacteria.
Today’s near-5% tumble from WFM brings the three-day rout to nearly 10%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.