Shares of Agilent Technologies Inc. (NYSE: A) traded down more than 12% on the day just before noon Wednesday. The health care diagnostics and research firm reported revenues of $1.24 billion for its second fiscal quarter ended April 30, a bit short of the $1.27 billion analysts had been looking for. Adjusted earnings per share (EPS) came in as expected at $0.71.

The takedown on the stock is due to a weak quarter in Agilent’s largest division, the Life Sciences and Applied Markets Group (LSAG), where second-quarter revenues dipped 1% year over year to $529 million due to weakness in the pharmaceuticals and food markets.

In its third-quarter outlook, the company said it expected revenue in the range of $1.225 billion to $1.245 billion and adjusted EPS of $0.71 to $0.73. For the full 2019 fiscal year, Agilent is expecting revenues of $5.085 billion to $5.125 billion and adjusted EPS of $3.03 to $3.07.

The consensus estimate for third-quarter revenue is $1.27 billion with EPS of $0.73. For the year, analysts are looking for revenues of $5.19 billion and EPS of $3.07.

On the company’s conference call, CEO Michael Mullen attributed the shortfall in LSAG revenues to a “slowing of instrument orders from China” and a “slowdown in orders from big pharma.” LSAG revenue fell by 1% in China because a recovery in the country’s food market “has not yet materialized.” The government’s program to lower prescription drug prices is having “a greater than expected impact on small molecule pharma.” Small-molecule drugs are nearly always available as pills as opposed to large-molecule drugs that are typically given by injection. Small molecule drugs are also easier for generic drugmakers to duplicate.

Mullen said he expects Agilent’s LSAG business to remain soft in the second half of the company’s fiscal year.

CFO Robert McMahon addressed the impact on the company from an increasingly testy trade war between the United States and China. McMahon note, “The developments in China coupled with their continued uncertainty on trade is creating a more challenging macro environment.” But a softer market for LSAG instruments is not going to be offset by additional growth in the company’s Crosslab Group or its Diagnostics and Genomics Group, both of which are tabbed to do no better than to maintain current financial guidance.

Even minor slips these days generate big waves. Agilent’s shares traded down about 11.7% in the noon hour Wednesday, at $67.10 in a 52-week range of $60.42 to $82.27. The stock’s 12-month consensus price target was $88.42 before results were announced last night.

In early April, Agilent stock traded at a five-year high that equaled about 110% of its starting price for the period. As of Wednesday, the stock is up about 66% over the five-year period, still better than the roughly 50% gain for the S&P 500 over the same timeframe.

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