Between tepid retail sales and sub-par industrial activity for August, it was easy for investors to presume that even the remote possibility of a September rate hike had been destroyed, subsequently sparking a buy-in from the bulls who’d been waiting on the sidelines for such news. The S&P 500‘s close of 2147.26 on Thursday was 1.01% better than Wednesday’s last trade.
Here’s what traders need to know.
Monsanto Company (MON)
After a lengthy courtship, German healthcare and farming name Bayer AG (ADR) (OTCMKTS:BAYRY) has finally persuaded U.S. farm rival Monsanto Company to be acquired. The 2.4% pullback MON shares dished out today, however, says shareholders are either not thrilled with the $66 billion all-cash offer, or not sure the deal’s going to be consummated, or both.
With an offer $128 per share of MON — a 22% premium to today’s price — Monsanto owners have little to complain about in terms of valuation, putting the spotlight on the potential pitfalls the pairing may find before merging.
In the shadow of several other consolidations within the agricultural supply industry completed or in the works, regulators are likely to quell the deal on the grounds that it would defeat an adequate amount of competition in the space.
VF Corp (VFC)
MON may have been the most recognizable loser among large-cap stocks today, but it wasn’t the biggest loser in the midst of otherwise bullish trade. That (dis)honor belongs to apparel company VF Corporation. VFC shares lost more than 3% of their value on Thursday thanks to an alarming downgrade.
Bank of America/Merrill Lynch did the deed, downgrading VFC from “Buy” to “Underperform” on Thursday morning, citing an industry-wide softening of demand for its brands, which include North Face, Vans and Timberland. BofA/Merrill Lynch also lowered its price target on VFC from $73 to $54. The stock closed near $56 today.
Sarepta Therapeutics Inc (SRPT)
Finally, although it’s only a small cap and therefore didn’t do as much net damage as MON and VFC did to investors, the 7.5% setback Sarepta Therapeutics shares suffered today did the most relative damage to those traders who own a piece of the biopharma stock. It wasn’t as if Sarepta Therapeutics did anything wrong, however.
Today’s pullback from SRPT is actually the end result of yesterday’s 28% surge; some profit-taking could be expected.
The bullish pop in question came on the heels of news that the Federal Drug Administration’s Ronald Farkas had left the agency. Farkas was a critic of Sarepta’s Duchenne Muscular Dystrophy drug eteplirsen, but his departure was widely viewed as a reason to expect the drug’s approval. With some time to sleep on it though, SRPT owners have decided the drug’s future isn’t quite as personnel-dependent as concluded on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.