The market didn’t get Wednesday started on a decisive foot, but it certainly ended the day on a decidedly bullish note. By the time the closing bell rang, the S&P 500 was at 2171.37, up 0.53% despite the lack of any clear buying catalyst.
It wasn’t a bullish day for every stock, however. Tempur Sealy International Inc (NYSE:TPX), Nike Inc (NYSE:NKE) and Twitter Inc (NYSE:TWTR) all finished the session more than a little bit in the red.
Here’s the deal.
Twitter Inc (TWTR)
Between last Thursday and yesterday’s close, Twitter shares gained 27%, spurred higher by talk of an imminent acquisition. Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Salesforce.com, Inc. (NYSE:CRM) were initially suggested as suitors, but Walt Disney Co (NYSE:DIS) and even Microsoft Corporation (NASDAQ:MSFT) have since been named as possible buyers.
A funny thing happened on the road to a buyout, however … nothing. TWTR has been flying high on a presumed buyout, but not one of those would-be buyers has actually expressed any interest, nor taken any action despite the clear message that the microblogging site may not be up for grabs for much longer.
It’s not a detail that went unnoticed by Mizuho Securities. Mizuho downgraded TWTR on Wednesday from “Neutral” to “Underperform,” maintaining its price target of $15 per share. Analyst Neil A. Doshi explained “We are skeptical of these potential business combinations and believe that the stock is overvalued as business fundamentals have deteriorated significantly over the past 12 months.”
TWTR ended the day down 3.2%.
Nike Inc (NKE)
TWTR wasn’t the only name to be up-ended by analyst doubts today. Nike lost 3.8% of its value on Wednesday after Canaccord as well as Morgan Stanley cautioned investors that owning NKE could be trouble.
The recently completed fiscal Q1 was solid enough. Revenue grew 8%, and earnings of 73 cents per share handily topped estimates for a profit of 56 cents per share of NKE. But, the shoemaker added that orders through January were only expected to rise 5%, versus a 9% growth forecast at this point a year ago.
Based on that industry growth outlook, Canaccord said it’s unlikely the company will be able to meet its still-lofty guidance. Canaccord’s analyst warned that Nike’s fiscal Q1 report was “peppered with red flags,” and added, “Given the moderating futures, we are hard pressed to see how Nike will realize that level of acceleration given the intensifying competitive landscape. All in all, this quarter raised more questions than it answered.”
Credit Suisse analyst Christian Buss said of NKE that “reasons for caution increase,” while Morgan Stanley analyst Jay Sole explained that Nike needs to innovate if it wants to remain competitive with rivals like Adidas AG (ADR) (OTCMKTS:ADDYY).
Tempur Sealy International Inc (TPX)
Finally, Tempur Sealy International lowered its third quarter guidance — a lot — after Tuesday’s close, and TPX shareholders paid the price for it today. When all was said and done, Tempur Sealy ended the session lower to the tune of 22%.
The mattress maker cautioned its third-quarter sales would roll in less than previously expected, contributing to 2016 sales that would likely be 1% to 3% less than 2015’s top line. Tempur Sealy International lowered the top- and bottom-end of its net income range both by $25 million, to expectations of something between $500 million and $525 million for the year.
The lowered guidance was enough to prompt a downgrade of TPX by Longbow. The research outfit now rates the stock at “Neutral,” down from a “Buy.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.