Friday certainly got started on a bullish foot, with buying fueled by reports that Q2’s GDP growth rate was an even-better-than-expected 3.9%. By the time the closing bell rang, however, investors recognized it was just another reason for the Federal Reserve to raise rates in December. The S&P 500 finished the day and the week at 1931.34, down 0.05%.
Leading the charge lower were Micron Technology, Inc. (NASDAQ:MU), Finish Line Inc (NASDAQ:FINL) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX), which ended as three of the worst-performing names in the stock market today.
Here’s why:
Valeant Pharmaceuticals (VRX)
This week has been a tough one for most biotech stocks, and specialty biopharma stocks in particular. Democratic Presidential hopeful Hillary Clinton — who is her party’s frontrunner so far — tweeted on Tuesday she was going to fight extortion-like high prices of specialty drugs, and unveiled her plan to do so on Wednesday.
It’s a turn of events that takes dead aim at companies like Valeant Pharmaceuticals, and could prove to be downright destructive to VRX stock for one key reason… Valeant doesn’t develop its own drugs. Rather, the company prefers to buy drugs after they’re already been developed and are on the market.
Though the strategy circumvents R&D costs, some would argue that Valeant Pharmaceuticals pays a pretty penny to buy already-marketed drugs. If Clinton’s plan becomes a reality, VRX shares could be in real trouble since the company has little R&D experience of its own, and paying big for drugs already on the market could turn into a profitless business model.
Today’s 4.8% tumble from VRX translated into an 17% loss for the week.
Micron Technology (MU)
Just when you think it can’t get any worse for Micron Technology, and by extension, for MU shareholders, it gets worse.
On Friday, Wedbush lowered its price target on MU from $19 to $17. Though he still categorizes Micron Technology as “neutral,” analyst Betsy Van Hees noted:
“We are concerned that the near-term spot PC DRAM pricing stabilization could be short lived as the uplift from typical holiday seasonality in CQ4 is looking to be muted due to weak PC and mobile demand affected by macro uncertainty.”
MU fell nearly 3% following the lowered target, bringing the year-to-date loss back to more than 57%.
Finish Line (FINL)
Last but certainly not least, Finish Line stumbled on Friday following the release of some rather disappointing results, which were followed by a rather tough downgrade of FINL stock.
Last quarter, athletic shoe and apparel retailer Finish Line earned 57 cents per share on $483.2 million in sales. Earnings met analysts’ expectations, but the top line fell short of the $490.8 million the pros were calling for. Both figures were better than their year-ago comparables, but not by enough. Same-store sales growth of only 1.5% was also seen as a let-down. The results were disappointing enough for Monness Crespi Hardt to lower its opinion on FINL from a buy to only neutral, based on concerns that the company’s outlook may be a bit optimistic.
While Monness Crespi Hardt isn’t exactly a head-turner in the world of research houses, between its downgrade and lackluster numbers from Finish Line, FINL stock fell a stunning 19.6% on Friday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
