A stellar jobs report for July spurred a big bullish rally on Friday, taking the S&P 500 to record highs — to heck with the market’s crazy valuations. When all was said and done, the S&P 500 gained 0.86%, closing at 2182.87 for the day and the week.
Not every name got in on that rally effort though. In fact, Bristol-Myers Squibb Co (NYSE:BMY), Liberty Interactive Corp (NASDAQ:QVCA) and Royal Bank of Scotland Group PLC (NYSE:RBS) were headed in the exact opposite direction.
Here’s the deal.
Bristol-Myers Squibb Co (BMY)
Small-cap biopharma stocks aren’t the only ones to live and die by the sword of drug-development success. Large-cap players in this space can also get rocked and rolled when things go well (or don’t go well) on the research and development front. Just ask investors who owned Bristol-Myers Squibb as of this morning’s open. They watched their BMY shares fall a hefty 16% following bad news on the R&D front.
The drug in question was the ballyhooed cancer drug Opdivo, as a treatment for advanced non-small cell lung cancer. Although it has already been approved for other forms of cancer, it surprisingly didn’t perform as expected in late-stage trials as a lung cancer therapy, keeping the $12 billion NSCLC market out of Bristol-Myers Squibb’s grasp.
Shares of pharmaceutical peer Merck & Co., Inc. (NYSE:MRK), on the other hand, jumped 10% on the news, as it leaves Merck with one fewer player in the non-small cell lung cancer arena. Merck’s PDL1 immunotherapy drug Keytruda is performing well in this space, and with Bristol-Myers Squibb’s drug out of commission, Merck could have a year or more to become the go-to name in this market.
Liberty Interactive Corp (QVCA)
It takes a bit of a roadmap and a history lesson to pin-down exactly why Liberty Interactive shares were down 21.6% on Friday. Regardless of the reason though, the explanation is alarming.
Liberty Interactive — more properly called Liberty Interactive QVC Group or just QVC Group — is the owner/operator of TV-shopping channel QVC. It’s also the name behind Zulilly and a part-owner of HSN (Home Shopping Network) thanks to some relatively recent acquisitions. The common element is clear, even if the preferred company name isn’t.
Either way, QVCA shareholders were warned today that beginning in June, QVC’s sales saw a significant slowdown, turning negative in a year-over-year basis by “mid to high single digit percentages.” QVC president and CEO Mike George vaguely explained, “Late in the quarter, we experienced a deceleration in demand in the US that has continued. As a result, our near-term perspective is more cautious.”
Royal Bank of Scotland Group PLC (RBS)
Finally, as if the Royal Bank of Scotland Group PLC didn’t have enough of a headache to deal with in the wake of the looming Brexit, the company fanned its own bearish flames today by virtue of disappointing first-half results. Over the course of the first six months of the year, RBS lost $2.26 billion, and the losses could get even bigger during the second half of the year in the wake of lower interest rates.
The big losses are the lingering impact of what has become a messy and complicated effort to restructure itself, even before the Brexit vote. More of the same is in the cards.
RBS closed 6% lower for the session.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.