Monday was a choppy day for the stock market, and major market indexes finished very close to unchanged as market participants struggled to parse the latest happenings in the 2016 presidential election campaign. For Brocade Communications Systems (BRCD), Embraer (ERJ -2.82%), and Team Health Holdings (NYSE: TMH), however, the day was a successful one for their stocks. Here, we'll look more closely at these stocks to tell you why they did so well.
Image source: Brocade Communications Systems.
Brocade climbs on takeover speculation
Brocade Communications Systems soared 22% in the wake of speculation that the network equipment company might be looking to find a bidder to sell itself. According to the Bloomberg report, Brocade is in discussions with respect to a sale process, and Broadcom is reportedly one of the companies that might be interested in buying Brocade if it is indeed for sale. With competition ramping up in the technology industry, some market participants believe that combining companies to provide for some vertical integration of processes tied to fast-growing areas like data centers could be the best way to develop a competitive advantage. Regardless, investors will want to see quick confirmation that the sale is in fact happening in order to sustain the big rise in its share price today.
Embraer gains altitude
Embraer picked up 7% after the jet maker reported its third-quarter financials. The Brazilian company posted an 18% rise in revenue that sent adjusted net income up by 11%, and the strength of its large-scale commercial aviation segment was the driving factor for the company. Yet even though the company's business jet division didn't do as well, investors applauded Embraer management's stand to be willing to give up executive jet sales if it means sustaining profit margin at or above current levels. Given how much the airline industry has benefited from strong conditions in recent years, Embraer continues to have power as it rolls out its new E2 family of regional jets. Moreover, news that the jet maker has apparently put a joint investigation by the SEC and Department of Justice behind it also made investors more confident in Embraer's future.
Team Health scores a private-equity bid
Finally, Team Health Holdings jumped 16%. The physician services organization said this morning that it had agreed to be acquired by private-equity funds affiliated with Blackstone Group. As part of the deal, Team Health shareholders will receive $43.50 per share in cash, essentially confirming prior reports that Team Health had been considering a possible sale. As part of the deal, Team Health said that investors at JANA Partners had agreed to vote in favor of the transaction, which is important given JANA's 8% stake in the company. Team Health CEO Leif Murphy said that the deal leaves Team Health "uniquely positioned to leverage our national scale and functional expertise to drive high-quality patient care, operational efficiencies, and physician satisfaction in hospital-based and post-acute settings," but shareholders of Team Health won't get the chance to share in the success of that business going forward.