Unable or unwilling to follow through on Tuesday’s bullish effort after hearing Wednesday morning’s non-directional producer price inflation report, the S&P 500 ended the day at 2,176.94. That’s down 0.16% versus Tuesday’s closing price.
Not every stock managed to merely drift sideways though. Mallinckrodt PLC (NYSE:MNK), Lowe’s Companies, Inc. (NYSE:LOW) and PDL BioPharma Inc (NASDAQ:PDLI) were all sent lower, each for a unique reason.
PDL BioPharma Inc (PDLI)
Just when it looked like biopharma stock PDL BioPharma was finally starting to pull out of a funk in response to the election of Donald Trump, the rug was pulled out from underneath PDLI today when shareholders got a dose of bad news.
That news? The company is looking to issue $150 million worth of convertible debt, which poses a dilution threat to existing PDLI owners. The notes in question would be senior unsecured notes, paying out twice a year. Holders can convert their stake to PDLI stock at any time before they come due in December of 2021.
PDLI ended the day down 18% in the wake of the news.
Lowe’s Companies, Inc. (LOW)
It wasn’t the 18% hit that PDLI shares suffered on Wednesday, but the 2.9% pullback Lowe’s Companies shares dished out today still weren’t easy for investors to digest.
The prod for the pullback was last quarter’s results. The home improvement retailer earned 88 cents per share on a top line of $15.74 billion. Problem is, the pros were calling for a bottom line of 96 cents per share and sales of $15.9 billion.
The company also offered lackluster Q4 guidance. It now foresees full-year earnings of $3.52, versus analyst expectations of $4 per share.
“Our third quarter operating results were below our expectations due to slower sales in the first two months of the quarter. While we expected moderation in the second half of the year, traffic slowed more than we anticipated in August and September before improving in October, which put pressure on our profitability in the quarter.”
Oppenheimer’s Brian Nagel responded:
“The tone of the Lowe’s press release implies to us that management is potentially embarking upon some type of “reset.” Lowe’s took a number of charges in Q3 and seems set to invest differently going forward. We continue to view Home Depot (HD) as the better play in home improvement retail.”
Mallinckrodt PLC (MNK)
Last but not least, famed short-seller Andrew Left, of Citron Research, took aim at U.K. drugmaker MNK today, warning shareholders to dump their shares.
Has rationale? With Donald Trump and a mostly Republican congress looking to reel in rampant waste within the government’s healthcare programs, Mallinckrodt is an easy target. He explained:
“President-Elect Trump has made it a promise to cut waste, fraud and abuse from the government’s health care reimbursement system. With Medicare’s own data, Citron has now proven that Mallinckrodt is the embodiment of all three.”
MNK is the maker of HP Acthar Gel, which is the most expensive drug Medicare and Medicaid cover. The programs spent a whopping $162,371 on the gel for each patient using it last year.
MNK closed 12% lower on Wednesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.