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4 Companies That Destroyed Shareholders This Past Week
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Earnings season is practically over. The analysts that were expecting earnings disappointments for this season appear to have been correct as many companies have fallen flat in the past few weeks.
Back to the beginning of this season, S&P Global Market Intelligence made a call that earnings for the S&P 500 would shrink by about 8% in the first quarter, which at this point does not look like a bad call.
24/7 Wall St. has picked out a few of these companies that lost big this past week. Among the active stocks, these all issued or had news that pushed shares down.
24/7 Wall St. has included their recent trading history, as well as the 52-week trading range and the consensus analyst price target.
Aduro BioTech
Following negative results in its mid-stage ECLIPSE trial, Aduro BioTech Inc. (NASDAQ: ADRO) shares tumbled on Monday morning. The company announced that the Phase 2b ECLIPSE trial did not meet the primary endpoint of an improvement in overall survival for patients with pancreatic cancer who had failed at least two prior therapies in the metastatic setting.
The primary endpoint of this trial was overall survival, while secondary endpoints included evaluation of clinical and immune response and safety. The median overall survival in this third-line and greater setting was 3.8 months for patients treated with the immunotherapy regimen of CRS-207 and GVAX Pancreas, 5.4 months for patients treated with CRS-207 alone and 4.6 months for patients administered chemotherapy.
Law firms are now ‘investigating’ for future class action suits. The company’s official press release, from Chairman (and president and CEO)Stephen T. Isaacs, said:
This is an unexpected outcome, and we are disappointed particularly for the pancreatic cancer patients who are in need of additional treatment options… While we are well aware of the very difficult-to-treat nature of late-stage metastatic pancreatic cancer, we are surprised by the divergence of these data from the results of our Phase 2a study. At the same time, we continue to look forward to the interim results later this year from our ongoing STELLAR trial, which is evaluating CRS-207 and GVAX Pancreas with and without the anti-PD1 checkpoint inhibitor nivolumab as a second-line therapy for patients with metastatic pancreatic cancer. We believe the scientific rationale for combining CRS-207 with a checkpoint inhibitor is compelling. Additionally, as a company, we are very well-positioned with a strong cash position and three differentiated, potentially synergistic immunotherapy platforms comprising our LADD, STING pathway activator and B-select monoclonal antibody programs.
Aduro’s stock hit a multiyear low to kick off the week, and shares fell 32% to this low, but by the end of the week the stock made a handy recovery. The stock closed at $10.47 on Friday. Its consensus price target was $26.20. The 52-week trading range is $7.26 to $37.49.
Target
Target Corp. (NYSE: TGT) reported its fiscal first-quarter financial results Wednesday morning. Although the numbers were mixed, albeit with better-than-expected earnings, guidance seemingly cratered this stock. Some might attribute this to the Amazon effect, while others are seeing this as a weather-related issue.
The company said it had $1.29 in earnings per share (EPS) on $16.20 billion in revenue. That compares to consensus estimates from Thomson Reuters of $1.19 in EPS on revenue of $16.31 billion. In the same period of last year, Target posted EPS of $1.10 and $17.12 billion in revenue.
In terms of guidance for the fiscal second quarter, the company expects comparable sales of flat to down 2% and EPS in the range of $1.00 to $1.20. The consensus estimates call for $1.36 in EPS on $16.68 billion in revenue for the quarter.
Last week, the stock fell over 6%. The stock closed at $68.66 on Friday. Its consensus price target is $78.64. The 52-week range is $65.50 to $85.81. Target even became the subject of likely class action suits this week in press releases from law firms after the report.
Brian Cornell, chairman and CEO of Target, said:
We are pleased with our first quarter financial results, which demonstrate the effectiveness of our strategy in an increasingly volatile consumer environment. First quarter comparable sales in Signature Categories grew more than three times the Company average, digital comparable sales grew 23 percent, and strong execution by our team delivered stronger-than-expected growth in Adjusted EPS. With an outstanding team, a resilient business model and a strong balance sheet, we plan to successfully implement our long-term strategy, even in the face of a challenging short-term consumer landscape.
Francesca’s
Early on Tuesday, shares of Francesca’s Holding Corp. (NASDAQ: FRAN) plunged after the company announced changes in management. Chairman, President and CEO Michael Barnes has resigned, effective immediately. So Francesca’s lead director, Richard Kunes, is taking on the role of interim chairman, president and chief executive of the company.
Judging by the shift that shares took, investors do not appear to be convinced of the company’s new direction. An immediate CEO departure is generally never good and could potentially signal further fallout within the company, but this has yet to be seen. The company also gave out some information ahead of earnings that might seem bearish as well.
24/7 Wall St. identified what this transition likely means for the company in coverage this week. Mr. Kunes said in the release:
We wish Mike the best in his future endeavors. During his tenure, Mike built a strong leadership team of highly accomplished and talented executives. The Board has the utmost confidence in the management team to execute the business plans for fiscal year 2016 and the initial strategies of Vision 2020, the Company’s long range plan. In addition, our Board members have diverse and talented backgrounds and will provide ongoing support and guidance to the management team.
Over the course of the week, the stock was down 29%. Shares ended Friday at $10.56. The consensus analyst target is $15.45, and the 52-week range is $10.05 to $19.90.
Allegheny Technologies
Following the announcement of its new debt offering, Allegheny Technologies Inc. (NYSE: ATI) made waves early on Wednesday. The company showed that it will be a $250 million convertible note raise and details were disclosed below.
ATI has agreed to sell $250.0 million aggregate principal amount of 4.75% Convertible Senior Notes due 2022, but note holders may convert their notes into shares of common stock. The conversion rate will initially be 69.2042 shares of common stock per $1,000 principal amount of notes, with an initial conversion price of approximately $14.45 per share. Allegheny’s press release gave the use of proceeds as follows:
ATI intends to use the net proceeds from the offering for general corporate purposes, which may include voluntary or required contributions to the company’s defined benefit pension trust or repurchases, repayment or refinancing of debt.
The stock was down about 21% last week, and shares ended Friday at $11.23. The consensus analyst target is $16.13, and the 52-week range is $7.08 to $34.59.
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