Unable to follow through on Tuesday’s decidedly bullish action, the market fell back — albeit modestly — on Wednesday. The S&P 500 Index’s close of 2,444.04 was 0.35% lower than Tuesday’s last trade, leaving the index within striking distance of record highs hit a couple of weeks ago. More political uncertainty was pegged as the reason.
That small pullback was nothing compared to the baths Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), Omnicom Group Inc. (NYSE:OMC) and Stryker Corporation (NYSE:SYK) took today.
Here’s a closer look at what up-ended each one.
Stryker Corporation (SYK)
It’s difficult to distinguish to what extent revised (lowered) guidance from medical equipment maker drove the stock down today, and how much of the loss stemmed from news that some of its products were being recalled. Between the two dark clouds though, it can’t be a complete surprise SYK lost 4.9% of its value.
For the third quarter currently underway, Stryker expects earnings to roll in between $1.50 and $1.55 per share of SYK, versus analyst estimates of $1.53. For the full year, organic sales growth is expected to come in closer to 6.5% than 7.0% … the two endpoints of its previous guidance. It sounded and felt like a cautious, veiled warning.
At the same time, Stryker announced it was recalling certain Oral Care products and it was simultaneously, temporarily holding shipments of some cloth-based products. No known problems have surfaced, but there is a safety concern that SYK shareholders couldn’t look past.
Omnicom Group Inc. (OMC)
Advertising and public relations outfit Omnicom Group was Tuesday’s biggest large-cap loser, but not because of anything Omnicom specifically did. Rather, OMC shares tanked mostly in response to something bigger rival WPP plc (NASDAQ:WPPGY) said — companies are spending less on advertising than they have in the recent past.
The cautionary tale was packed with an interim (2017) fiscal report posted by WPP this morning, which blamed a little of everything for the company’s slowdown. Cenkos Securities analyst Alex DeGroote felt some of the explanations were unrelated to the headwind, though DeGroote still sees that headwind as legitimate. He opined:
“The bottom line is this is the worst growth rate since the financial crisis, and nobody could argue that the current times are as bad as the financial crisis. I can see the shares going weaker still over the days to come.”
The market took DeGroote’s assessment at face value, and extrapolated and applied them to OMC, which ended the day down 7%.
Ultragenyx Pharmaceutical Inc (RARE)
Last but not least, shareholders of biopharma company Ultragenyx Pharmaceutical were thrown an unexpected curveball today, learning that the company’s aceneuramic acid extended release (Ace-ER) treatment for GNE myopathy (GNEM) didn’t perform well enough to justify its continued development.
The treatment had worked well enough through phase 2 trials to prompt Ultragenyx to carry its development deep into phase 3 testing, but the data surfacing from the latest stage of its trials didn’t pan out as hoped.
The company is going to abandon the research thus far rather than try to salvage it. That decision sent RARE to a loss of 13.3% for the day.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. Follow him on Twitter, at @jbrumley.