Encouraged by a surprisingly strong February jobs report, stocks spent the bulk of Friday’s session in the black. The close of 2,372.6 was 0.33% higher than Thursday’s last value, and ended an otherwise losing week on a bullish note.
Here’s what investors need to know about each setback.
Finisar Corporation (FNSR)
Networking equipment maker Finisar was hit especially hard on Friday, reporting disappointing Q3 results and following up with a disappointing Q4 outlook. The proverbial death blow, however, may have been dealt by analysts who lowered their view of FNSR stock in response.
For its recently completed quarter, Finisar earned 59 cents per share, falling short of the expected 62 cents per share of FNSR. Furthermore, revenue of $380.59 million missed expectations of $389.55 million. For the fourth fiscal quarter currently underway, the company anticipates earning between 50 and 56 cents per share, also shy of expectations of 58 cents per share.
The bulk of the 22.7% loss FNSR booked today, however, likely stemmed from Raymond James’s analyst comments. Although Simon Leopold still deems FNSR a “Buy,” he did lower his price target on the stock to $40, explaining:
“We are disappointed by the execution issues and softer outlook, but the after-market drop (16%) seems overdone. The improving prospect for involvement in new 3D sensing opportunities offers sufficient upside to help offset the latest estimate reductions. We are not dismissing execution concerns, but suspect the market will over-react.”
Toronto-Dominion Bank (TD)
Prompting flashbacks of the debacle Wells Fargo & Co (NYSE:WFC) dished out last year, Toronto-Dominion Bank — parent of online brokerage firm TD Ameritrade — was punished today for a seemingly similar reason.
In the middle of last year, mega-bank Wells Fargo was found to have opened over 2 million phony bank and credit card accounts, as bankers felt pressure to meet sales quotas. The bank has since apologized and changed its policies accordingly, but it is still reeling from the dent its reputation took.
Toronto-Dominion may be about to join the club. On Friday, rumors surfaced that its tellers may have also applied undue pressure on customers in order to reach sales goals. While the size and scope of the questionable approach is nowhere near that of Wells Fargo, consumers as well as investors are far more sensitive to the impact that possibility may make.
TD ended the day down 5.3%.
Zumiez Inc. (ZUMZ)
Last but not least, trendy retailer Zumiez managed to top its fourth-quarter estimates. But, it’s Q1 outlook was lackluster to say the least.
For the quarter ending in late-January, Zumiez earned 74 cents per share on sales of $263.6 million. The per-share bottom line was up nearly 40%, while the top line grew almost 9% on a year-over-year basis. Both figures also surpassed earnings expectations of 67 cents per share of ZUMZ, and revenue estimates of $262 million.
It was the outlook for the quarter currently underway that sparked the 12.4% setback for ZUMZ stock. The company is looking for a loss of between 17 cents and 21 cents per share, versus analysts’ expectations for a loss of only 3 cents per share of ZUMZ.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.