Are These 3 Stocks Down for the Count?

Horse meat and Wal-Mart jockeyed for position in sending the Dow Jones Industrial Average lower on Friday, but the index fought its way back into positive territory and closed out the day up eight points, though it was still under the psychologically important 14,000-point threshold.

The three companies below, however, looked like they were about to be sent off to the glue factory nonetheless, as they were among the more notable ones heading in the other direction and leading the way sharply lower.

Company

Percent Change

Amicus Therapeutics (NASDAQ: FOLD  )

(25.7%)

Ruckus Wireless (NYSE: RKUS  )

(13.8%)

IPG Photonics (NASDAQ: IPGP  )

(9.7%)

Now don't panic: It could just be a temporary situation. Let's first see whether they had good reason to fall, as panic-fueled routs can sometimes lead to excellent buying opportunities.

On the precipice
Shares of Amicus Therapeutics did what its ticker symbol suggested it would do -- namely, fold like a house of cards following additional unfavorable results from its Fabry disease treatment migalastat. In December, Amicus and development partner GlaxoSmithKline said phase 3 clinical trials also failed to meet its primary endpoint.

The current results showed there wasn't enough of a statistically significant improvement in patients treated with migalastat, though Amicus remains committed to moving forward to the next stage, with results due out sometime in the second quarter.

Fabry disease is a rare inherited disorder resulting from the buildup of a particular type of fat in the body's cells. Primarily a male disorder, Fabry disease affects an estimated 1 in 40,000 to 60,000 individuals. Sanofi is one pharmaceutical already producing a therapy, Fabrazyme, which saw sales almost double in 2012 to 292 million euros after a new manufacturing facility was constructed, though its shares also gave a up few pennies on Friday.

Raising a ruckus
Wi-Fi equipment maker Ruckus Wireless went public last November in a disappointing IPO that saw shares tumble 18% on its first day of trading, only to double in value over the next few months. After reporting earnings last week that handily beat analyst expectations but provided guidance that was only in-line with forecasts, the stock has been steadily selling off, losing a quarter of its value since last Tuesday.

That could be because the competition in the space is heating up and large, well-financed rivals like Cisco (NASDAQ: CSCO  ) are seeing their own Wi-Fi product sales soaring. Cisco recently said Wi-Fi sales doubled from the year-ago period, and with its acquisition of Meraki for $1.2 billion -- just as Ruckus was going public, coincidentally enough -- it could crowd out the potential of the upstart.

Yet being a newly public company means the equipment maker is going to experience periods of volatility as investors adjust to the changing landscape, but Cisco's presence, which it admits was pretty "tame" up until now, means the road forward for Ruckus may not be smooth.

Blinded by the light
Another company blinded by poorly received earnings was IPG Photonics, an industrial laser maker, which reported double-digit increases in sales but still managed to come in below Wall Street expectations.

Considering the tepid U.S. economy contracted in the fourth quarter for the first time since 2009 and manufacturing was barely positive in December (before turning negative in January), IPG's 17% increase in revenue and 5% increase in earnings per share seems a pretty strong performance regardless. Rather than IPG doing anything wrong, it's more probable analysts were unreasonably optimistic about what its growth prospects were, so I see a good chance for a rebound in the stock, which is now down 14% from its 52-week high.

Ready for a resurrection
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  • Report this Comment On February 26, 2013, at 3:51 AM, ScottCherf wrote:

    When you ask if IPG Photonics (IPGP) is "down for the count" you need to look at where the company is headed.

    One of the most disruptive technologies to rear its head in the early 21st century is three dimensional printing, and the core of that technology is Direct Metal Laser Sintering, a method of manufacturing that forms fully dense metal parts using lasers.

    IPG Photonics has the technology to advance that industry. Fiber lasers are perfectly suited to replace CO2 lasers in industrial applications because they are flexible, require far less maintenance than glass tube CO2 devices and are much cheaper to build.

    Keep a careful eye on IPGP. They're going places.

  • Report this Comment On February 26, 2013, at 4:03 AM, ScottCherf wrote:

    Oh yeah. I own a long position in IPGP. Thankfully :)

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