Still confused as to where stocks are headed next, traders reversed Thursday’s selloff on Friday, carrying the S&P 500 up 0.15% to a close of 2,423.41. That’s well below the prior week’s last trade though, and leaves the market down just a hair for the month of June.
Not every name escaped trouble on Friday though. Pandora Media Inc (NYSE:P), Cara Therapeutics Inc (NASDAQ:CARA) and Micron Technology, Inc. (NASDAQ:MU) all used more than their fair share of red ink.
Here’s what traders need to know about each pullback.
Micron Technology, Inc. (MU)
Chalk it up to a case of “buy the rumor, sell the news.” On Friday, despite an encouraging third-quarter report from computer memory company maker Micron Technology (not to mention a slew of related price target hikes), MU shares fell 5.1%.
For the period ending in May, Micron Technology earned $1.40 per share on revenue of $5.56 billion. The top line handily beat estimates of $5.37 billion, and the bottom line rolled in higher than the $1.37 per share of MU stock.
The company also upped its guidance on the heels of rising DRAM prices. The up-cycle is here to stay for a while too, at least according Rosenblatt Securities analyst Hans Mosesmann. He noted “The cycle is extending in terms of timing and nature of underlying demand that structurally changes this cycle vs. previous cycles. [This cycle] has legs for three to four years.”
Mosesmann was hardly alone in his enthusiasm. All told, ten analysts raised their price targets for MU after Thursday evening’s report.
So why the strong selling? Profit-taking, for one, though more than anything investors may be concerned about the amount of time that may be needed for MU to actually justify those lofty targets.
Cara Therapeutics Inc (CARA)
How does the saying go? If you live by the sword, you die by the sword? Shareholders of biotech outfit Cara Therapeutics know that all too well today. As of Thursday’s close, CARA shares were up more than 40% in less than two weeks in anticipation of an encouraging report on one of its drug trials. The stock fell 39.7% on Friday when that report turned out to be anything but encouraging.
The drug in question — CR845, for the treatment of pain in patients with hip or knee pain — didn’t actually reduce as much pain as hoped except in very large doses. And even then, the larger 5 mg dose only worked well enough for hips, and not knees.
The phase 2b’s results won’t inherently dismiss the possibility of an approval, but as Montgomery Scott analyst Ken Trbovich explained with his downgrade of CARA, the trial’s result “gives us less confidence in the outlook for a positive outcome for the phase 3 than we had previously.”
Pandora Media Inc (P)
Finally, after rallying quite nicely for a week and a half, Pandora Media finally felt the weight of those gains. Although the 2.5% setback P shares suffered on Friday wasn’t devastating, in light of the huge volume behind the bearish move, it clearly caught investors off guard.
Charles Payne summed up the crux of the rollover as well as anybody could, pointing out that in spite of all the recent bullish rhetoric about the impending exit of CEO Tim Westergren, the company is still facing a mountain of fundamental hurdles that will be tough to tackle no matter who’s at the helm. The market seemed to remember that today.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.