Already overbought thanks to an unusually bullish February, fears of an accelerated timeframe before the Federal Reserve’s first rate hike in years sent stocks crashing on Tuesday. When all was said and done, the S&P 500 lost 1.7% of its value during today’s trading session.
Some stocks, however, did much worse. Among the bottom-dwellers on Tuesday were Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), Akorn, Inc. (NASDAQ:AKRX) and GNC Holdings Inc (NYSE:GNC). Here’s what happened.
GNC Holdings Inc (GNC)
The rug finally got pulled out from underneath a seventh-month rally from GNC Holdings. On Tuesday, several state attorneys general — led by New York’s Eric Schneiderman — announced .
Though the investigation isn’t specifically targeting GNC Holdings stores, it’s apt to be one of the most affected by such an investigation, given its focus and reliance on supplements.
Fanning the bearish flames, less than three hours after Schneiderman announced the multi-state investigation, at least one law firm stemming from the implications of the Schneiderman-led investigation. More will likely follow.
Although GNC Holdings issued a statement after the close
, the damage had already been done. GNC shares fell 8.5%.
Melco Crown Entertainment Ltd (ADR) (MPEL)
Citi may see , but neither Deutsche Bank or Credit Suisse agree. In fact, Deutsche Bank downgraded MPEL from a “buy” to a “sell” and lowered the price target from $27.70 to $18.
:
“While we reckon that we shouldn’t read too much into a single data point, the persistent decline of daily run rate suggests that the sector’s fundamentals are yet to bottom, in our view. In the near term, we expect a continued weakening trend on gradual closure of VIP rooms (hurting both VIP and premium mass segments) and slow premium mass revenue (dragged by the VIP segment).”
Melco Crown Entertainment shares fell nearly 4% for the session.
Akorn, Inc. (AKRX)
The good news is that Akorn is still pretty certain it’s when it offered full-year revenue and earnings guidance back on Feb. 26. The bad news is that the market has its doubts Akorn will be able to do as well as hoped this year following news that a rival would soon be launching a skin cream that competes with Akorn’s clobetasol.
The pending launch of a competitor’s similar product, in fact, prompted Sterne Agree to .
Sterne Agee analyst Shibani Malhotra explained:
“We estimate that post price increases in 3Q14, clobetasol had become Akorn’s largest product. While we had risk adjusted our estimates for potential competition in 2H15, clobetasol still represented 13.6% of our 2015 estimated gross profit. While Akorn’s guidance contemplated the potential for additional competition, this comes earlier and from a larger player [Actavis] than we expected.”
AXRX finished Tuesday down more than 12%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
