U.S. stocks struggled on Thursday as big tech took another dive. Dow Jones Industrial Average fell 0.1%, the S&P 500 lost 0.2% and the Nasdaq Composite slipped 0.5%.
Heading into Friday’s action, Kroger Co (NYSE:KR) is suffering a hangover as analysts follow up on the grocer’s woeful earnings, Snap Inc (NYSE:SNAP) is recovering following its dive to a dubious mark, and Finisar Corporation (NASDAQ:FNSR) is surprisingly up despite disappointing results.
Here’s what you need to know heading into the day:
Kroger Co (KR)
And here come the downgrades.
KR shares were already knocked around by 19% yesterday following exceedingly disappointing full-year guidance. Now, the analysts are piling on.
Kroger on Thursday reported a decent first quarter. Revenues of $36.3 billion were ahead of analyst expectations, while earnings of 33 cents per share were in line. But what scared investors into mass exodus was a pullback in the company’s full-year forecast. Previously, Kroger was looking for $2.21 to $2.25 per share in earnings, but now it’s looking for $2 to $2.05.
The wreckage was vast. Not only did KR stock get hammered by nearly 20%, but companies like Whole Foods Market, Inc. (NASDAQ:WFM) and Sprouts Farmers Market Inc (NASDAQ:SFM) declined a few percent in sympathy.
This morning, KR is down another couple percent thanks to a number of downgrades. JPMorgan’s Ken Goldman brought the grocer down from “Overweight” to “Neutral” and lowered his price target from $34 to $24 (another 2% downside from Thursday’s close) citing cash flow issues and the cost of Kroger’s comps. Telsey downgraded Kroger from “Outperform” to “Market Perform.” And Goldman Sachs’ Stephen Tanal said he lacks faith that recovering food deflation and competitive balances will be enough to keep driving the stock; he downgraded KR from “Buy” to “Neutral” and lowered his PT from $33 to $26.
Snap Inc (SNAP)
SNAP shares are recovering on Friday morning, trying to rebound from a woeful day in which the stock lost nearly 5% and hit its IPO price of $17 right on the nose.
Snap Inc. has crashed a little more than 30% since its first day of trading back in early March. The company is reeling from constant updates from Facebook Inc (NASDAQ:FB) products that essentially are copycatted features from the Snapchat app. Moreover, the company’s first earnings report as a publicly traded company shook confidence in the social media firm, and has people wondering if it’s more Twitter Inc (NYSE:TWTR) than Facebook.
Meanwhile, the analyst community has been anything but supportive of Snap since they started doling out ratings.
For instance, Barclays, Argus, Canaccord Genuity and BTIG Research all started SNAP shares at hold-equivalent ratings. And Citigroup — which was a backer of the IPO — downgraded the stock to neutral just a week ago.
However, the $17 mark is at least providing some psychological support this morning, as SNAP stock is bouncing more than 1% off it.
Finisar Corporation (FNSR)
FNSR shares are surprisingly shooting higher on Friday morning after the optical subsystems specialist posted not-so-hot fourth-quarter earnings.
Finisar saw revenues climb 12% to $357.5 million to come in short of estimates. Earnings, which jumped an impressive 72% to 50 cents per share, merely matched consensus views. The company was hampered by lower revenues from Chinese OEM customers, the company said.
Finisar also provided conservative guidance for the current quarter — earnings of 40 cents per share on revs of $340 million. That came up quite shy of analyst expectations, which were for profits of 51 cents per share on $369.6 million in sales.
FNSR, which initially declined on the news, is now up by a solid 8% this morning as Wall Street gives its performance a second thought. If the gains stand, that should cut deeply into a roughly 15% loss in 2017 through Thursday’s close.