The Dow Jones Industrial Average’s 12-day winning streak wasn’t extended to a 13th session, leaving it just shy of tying a 1987 record. The S&P 500 ended the day down 0.26%, closing at 2,363.64 following a disappointing second reading on the fourth-quarter’s GDP growth rate. Economists were expecting the pace to improve from the first look to a rate of 2.1%, but it didn’t change from the initial estimate of 1.9%. That lower-than-expected growth pace put some of the air out of the market’s tires.
Here’s what wrecked these three names on Tuesday.
Perrigo Company plc Ordinary Shares (PRGO)
It’s not clear exactly which piece of news did the most damage to shares of biopharma company Perrigo Company on Tuesday. It may have been the disappointing 2017 outlook, or it may have been the fact that it’s selling its royalty rights on multiple sclerosis drug Tysabri. Realistically speaking though, it was arguably a little of both announcements that sent PRGO to the depths. It closed down by low than 11.7% today.
The announcement came after Monday’s closing bell rang — Perrigo Company believes it will report 2016 earnings of between $7.10 and $7.25 per share, topping its own previously stated guidance, and easily surpassing estimates for a profit of $6.95 per share of PRGO. But, the 2017 revenue outlook of between $5 billion in $5.2 billion did not compare favorably to the $5.5 billion top line PRGO shareholders had been expecting.
Charles Schwab Corp (SCHW)
At the beginning of the month, online brokerage firm Charles Schwab reduced its trading commissions from $8.95 per trade to only $6.95, sacrificing margins with the aim of gaining market share and gaining volume. As it turns out, the maneuver started a price war the firm may not have actually wanted to start.
In response to Schwab’s move, rival Fidelity lowered its commissions from $7.95 per transaction to only $4.95 per trade. Schwab can either respond or run the risk of losing market share. Either way, SCHW took a 3.2% hit on Tuesday.
Charles Schwab shares weren’t actually the biggest loser of the bunch today. That dubious honor belongs to TD Ameritrade Holding Corp. (NASDAQ:AMTD), which closed down to the tune of 10.4%, as the company has been mostly sitting out a price war. In terms of total market cap lost though, the much larger Charles Schwab company earned a spot on the daily ‘Worst 3’ list.
Valeant Pharmaceuticals Intl Inc (VRX)
With just a passing glance at the headlines, Valeant Pharmaceuticals should arguably the top today. The biopharma company topped its Q4 earnings estimates, which is usually a bullish event. Nevertheless, VRX shares ended the day down 13.9% for one overarching reason. That is, investors just didn’t get a warm, fuzzy feeling from the company’s outlook for the coming year.
For the quarter ending in December, Valeant earned $1.26 per share on revenue of $2.4 billion. Analysts were only looking for a top line of $2.3 billion, and profits of $1.20 per share of VRX. The company’s 2017 outlook is encouraging too … sort of. Valeant anticipates a top line of between $8.9 billion and $9.1 billion, versus analyst expectations of $8.9 billion. The EBITDA outlook, though, fell markedly short of the consensus view.
Shareholders also struggled with optimistic sales outlooks for the year currently underway without any company acknowledgement of, or explanation for, why most of its brands could fairly poorly last year.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.