Unimpressed by a better-than-expected number of job openings for June (or presuming it could accelerate the pace of planned rate hikes), the bears decided to growl on Wednesday. The S&P 500 closed at 2175.49, down 0.29%.
It could have been worse though, and it was for those who own KLA-Tencor Corp (NASDAQ:KLAC), Perrigo Company plc Ordinary Shares (NYSE:PRGO) and SunPower Corporation (NASDAQ:SPWR). These three names dished out the most bearish pain on Wednesday.
Here’s what traders need to know.
KLA-Tencor Corp (KLAC)
The proposed union of technology companies KLA-Tencor and Lam Research Corporation (NASDAQ:LRCX) was always a reasonably well supported one. There are mergers and acquisitions already underway in the semiconductor space, so it just makes sense the two similar but potentially synergistic outfits pair up to make each other better.
Once the finer points of the merger were unveiled though, shareholders weren’t quite as thrilled as they thought they’d be. KLAC was off more than 10% on Wednesday, while LRCX was off more than 4% when it was announced any union would be delayed … again. Moreover, some observers think some divestitures will be necessary to win approval for the deal.
Susquehanna Financial analyst Mehdi Hosseini explained:
“As we noted on July 15 following meetings at SemiconWest 2016 (LINK), Lam may have to divest certain assets as a means to please the likes of Samsung (that actually allocates as much as 10% of their Semi capex toward SCE vendors that are part of the Samsung (big, but happy) family. In this context, we believe the remedy mentioned in the press release from this morning as a reference to such divestiture is needed.”
Perrigo Company plc Ordinary Shares (PRGO)
Add pharmaceutical maker Perrigo Company to your list of names that have posted disappointing Q2 numbers, and then poured salt in the wounds with a lackluster outlook.
Last quarter, Perrigo earned $1.93 per share on revenue of $1.48 billion. Problem: Analysts were collectively looking for income of $1.98 per share of PRGO stock, and the top line was down a little more than 3% from last year’s Q2 revenue tally. The bulk of the 9.5% setback PRGO suffered today, though, likely stemmed from the company’s new 2016 guidance. Perrigo now anticipates earning between $6.85 and $7.15 per share of PRGO, versus prior guidance of between $8.20 and $8.60.
Fanning Wednesday’s bearish flames may have been some candid comments from always-colorful Jim Cramer, who described the second quarter’s numbers as “disturbing” and “problematic.”
SunPower Corporation (SPWR)
Finally, already vulnerable to even the mere prospect of problems — thanks to red flags recently waved by SolarCity Corp (NASDAQ:SCTY) as well as First Solar, Inc. (NASDAQ:FSLR) — SunPower shares were sent a stunning 30% lower today after the company announced it would be laying off 1,200 employees, and sooner than later booking a restructuring charge of between $30 million and $45 million. All told, SPWR told investors it could lose as much as $175 million this year.
Credit Suisse Group AG analyst Patrick Jobin summarized the bigger issue weighing on investors’ minds: “The cuts are problematic in their own rights, but the bigger issue for the stock from here is management credibility and lack of apparent stability in the core business.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.