Polypore International Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of filter maker Polypore International (NYSE: PPO  ) fell 26% in trading today on insanely high volume.

So what: With 90 minutes left in the trading day, 15 million shares have already traded hands. That compares to an average volume of less than 1 million shares. The only news of consequence today was the stock being downgraded to underperform by DA Davidson, as well as analysts at Axiom Securities initiating coverage with a sell rating and a $26 price target.

Now what: Since shares fell off a cliff about an hour after the market opened, there doesn't seem to be any stopping them. If you're a long-term investor then you might want to pull your hair out, but there isn't a solid reason to sell today. The company didn't release any terrible news today, so the market appears to be moving this way based on some analyst recommendations and momentum investors' bets. There may be further downside considering the momentum and new price target, but I wouldn't panic sell unless earnings are terrible when they're released next month.

Interested in more info on Polypore? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Motley Fool newsletter services have recommended buying shares of Polypore International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 31, 2012, at 4:00 PM, Remberner wrote:

    Did anyone at MF notice what the analyst commented on (among other things, such as a major customer initiating operations that might ultimately reduce/eliminate purchases from PPO) in his report downgrading the shares of PPO yesterday, namely that since January 2011, the top 5 execs have sold 91% of their vested shares? I could see divesting some shares given a market peak last year, but seriously, 91%? I'm a relatively new MF member, and bought shares on MF's recommendation. Any response to the analyst's comments?

  • Report this Comment On January 31, 2012, at 6:06 PM, monkeydadAC wrote:

    Why are these "What you need to know" write-ups never what you need to know?

  • Report this Comment On January 31, 2012, at 7:18 PM, deefraz wrote:

    The initial analyst downgrade came yesterday from Axiom Capital where Gordon Johnson (longtime FSLR bear) put out a Sell recommendation and a $26 price target His thesis: PPO is adding capacity and their margins have peaked. Management's dumping 91% of their vested shares seems to confirm. And today, a PPO customer in South Korea, LG Chem, announced it is building its own battery membrane plant and will have it up and running this year. Supply that exceeds demand is what's crushing solar and LED manufacturers. Today DA Davidson downgraded PPO and this afternoon JP Morgan commented that they would not be buyers. Sure the stock might bounce, but serious thought should be given to getting out. To attribute a 29% drop in the share price (not 26%, btw) to momentum trading alone is more than foolish.

  • Report this Comment On January 31, 2012, at 7:39 PM, orlando1705 wrote:

    Oversold, buy this stock as soon as it opens, it will go up to $48 after it opens, BTFD

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