The Week's Biggest Stock Disappointments

If the first few months of the year were a party, this week was a reminder that the stock market can still dole out some pain. Though headlines at the beginning of the week talked about a market "plunge," the drop for the week really wasn't all that bad. Even so, if Alcoa's estimate-topping earnings report hadn't helped pull the market back up for a couple of days, the bloodletting could have been even worse.

By the time the dust had settled on Friday, the Dow Jones Industrial Average (INDEX: ^DJI  ) had shed 1.6%, while the broader Russell 3000 lost 2%. Though the broad market may not have actually plunged, there were a handful of stocks that most definitely did.

The week's big losers
The U.S. Food and Drug Administration threw a bucket of cold water on ViroPharma's (Nasdaq: VPHM  ) stock this week, as it shot down a petition to keep Watson Pharmaceuticals from launching a generic version of its colitis treatment, Vancocin. This is no small matter for ViroPharma, since, as my fellow Fool Sean Williams pointed out, Vancocin accounted for $289 million of the company's $544 million in sales last year. Of course, while it's hard to think about that as anything but worrisome, biotech maven Brian Orelli noted that the long-expected entry of a Vancocin generic may make ViroPharma easier to value.

InterMune (Nasdaq: ITMN  ) , meanwhile, took it on the chin after an analyst from Jefferies reiterated its "underperform" rating on the stock and dropped his price target from $10 to $9. Notably, Jefferies has clearly been the voice of caution on the company, while many other Wall Street firms have more optimistic ratings on the stock as well as significantly higher price targets. However, it appears that the rest of the Street may be cooling to InterMune as well. During the week, RBC Capital downgraded the stock to "sector perform" while cutting its price target from $23 to $17 and Stifel Nicolaus dropped its price target from $39 to $32.

The 3 Worst-Performing Russell 3000 Companies

Company

Weekly Price Change

ViroPharma (26.8%)
Molina Healthcare (26.4%)
InterMune (25.4%)

Source: S&P Capital IQ. Weekly price change is April 6-April 13. Includes only companies with market caps of $250 million or more.

Also among the week's worst performers were Idenix Pharmaceuticals (Nasdaq: IDIX  ) and Swisher Hygiene (Nasdaq: SWSH  ) .

For a drug developer like Idenix, any signs that a key drug will have a tougher time than expected making its way to market are bound to shake up investors. In Indenix's case, it appears that investors are continuing to back away a week after an analyst from Brean Murray shared a pessimistic view on the future of Idenix's hepatitis-C treatment, IDX184. Not that any of this was particularly surprising to some Fools.

Like Idenix, Swisher's stock stayed on a downward trend this past week as investors continued to distance themselves from the company after it revealed an internal financial review and said past financials would have to be restated. While there may not have been huge new bombshells this week, the ugliness of the situation was kept front and center for investors as a wave of lawsuits rolled in and the company said that because of the investigation it won't file its 10-K by the extended due date and, as a result, will fall out of compliance with the stock exchanges that list it. My take? I like boring, dirty businesses like bathroom sanitation as an investment, but given the way Swisher has been managed, I'm staying far, far away.

At week's end, Idenix had slid nearly 14%, while Swisher had 15% hacked off of its share price.

That's it for the weekly laggards recap. Looking to turn the tides and find some strong outperformers in the year ahead? The Motley Fool has created a brand new free report titled "The Motley Fool's Top Stock for 2012." In it, my fellow Fools reveal a top pick that's poised for explosive growth ahead. Get instant access -- it's free.

We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


Read/Post Comments (1) | Recommend This Article (10)

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 April 15, 2012, at 11:50 AM, Mauricinho wrote:

    "Jefferies has clearly been the voice of caution" Well if one goes back YEARS the analyst (BTW its she not he) has always been more negative then other analysts so when the stock is down she does appear more accurate. For what its worth when the stock had bullish moves she really missed the boat! So people should do their own analysis and not count on analysts recommendations (though the reports are often beneficial for information).

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1862130, ~/Articles/ArticleHandler.aspx, 11/28/2014 12:22:06 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement