Following through on Monday’s bullishness and perhaps emboldened by more confidence in the outcome of Tuesday’s voting, the bulls charged again today. The S&P 500’s close of 2139.53 was 0.38% better than Monday’s last trade, and ended the day testing a key technical ceiling.
Not every stock jumped on the bullish bandwagon though. Valeant Pharmaceuticals Intl Inc (NYSE:VRX), ArcelorMittal SA (ADR) (NYSE:MT) and CVS Health Corp (NYSE:CVS) each ended the day in the red, as investors decidedly voted “no” for each of them.
CVS Health Corp (CVS)
The market has known for a while the risk was out there. But here’s just something about seeing the risk become a reality that drives a point home, and drives a stock lower.
On Tuesday, pharmacy chain CVS Health confirmed that an increasingly strict and cost-conscious health insurance industry has limited its choice of pharmacies its customers can use to fill prescriptions. The end result for CVS is a projected reduction of 40 million prescriptions in 2017, setting up a 11.8% plunge in the value of CVS today.
Walgreens Boots Alliance Inc (NASDAQ:WBA) is being pegged as the primary beneficiary of this shift, which apparently has a better relationship with pharmacy benefits managers which largely make these types of business funneling decisions … most of which are two-way concessions.
Fanning the bearish flames that burnt CVS Health on Monday was lowered 2016 profit guidance. The company had forecast a full-year profit of between $5.81 and $5.89 per share, but reeled that outlook in to a range of only $5.77 to 5.83 per share of CVS.
ArcelorMittal SA (ADR) (MT)
Luxembourg-based steel company ArcelorMittal failed to meet its third quarter profit estimates, and then poured salt in the wounds by warnings its fourth quarter numbers would be disappointing as well.
Yet, the company’s Q3 was also the most profitable quarter it’s seen in a long while.
For its third quarter of 2016, ArcelorMittal reported net income of $1.95 billion, up 40% from year-ago levels. Stronger steel prices drove the lion’s share of that improvement.
It also may have been something of a one-off, though, in that falling steep prices and rising coking coal prices in the meantime are crimping margins again.
MT shares ended the day down 6.5%.
Valeant Pharmaceuticals Intl Inc (VRX)
Last but not least, Valeant Pharmaceuticals mustered another all-too-familiar selloff on Tuesday, with VRX shares losing 21.8% of their value following the release of the drugmaker’s third-quarter numbers and a disappointing outlook for the coming year.
Last quarter, Valeant earned an operating profit $1.55 per share of VRX on $2.48 billion in revenue. Problem: Analysts were calling for a bottom line of $1.75 per share and sales of $2.49 billion. Sales were also down 11% on a year-over-year basis.
Valeant also lowered its full-year revenue guidance from a range of $9.9 billion to $10.1 billion to only a range of between $9.55 billion and $9.65 billion. Profit guidance fell from a range of between $6.60 and $7.00 per share to only a range of $5.30 to $5.50.
Although the company didn’t provide any 2017 guidance figures, new CFO Paul Herendeen warned that loss of patent protection could prove to be a problem.
In his words: “We simply do not expect to be able to overcome the overall growth drag of the neuro and generic businesses in 2017.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
