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Why Finisar, Lexicon Pharmaceuticals, and Zumiez Jumped Today

By Dan Caplinger – Sep 9, 2016 at 6:53PM

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The market fell sharply on Friday, but these stocks rose. Find out why.

Image source: Finisar.

On Friday, the stock market finally made a big move after months of largely treading water. Major market benchmarks had their worst day since the June Brexit vote in the U.K. rocked investor confidence. Despite ongoing concerns about the strength of the U.S. economic recovery, the Federal Reserve appears to be setting the stage for interest-rate increases by the end of 2016, and that had some investors readjusting their expectations for the impact of rates on both the stock and bond markets. Even though the Dow finished down almost 400 points, some stocks managed to post gains, and Finisar (FNSR), Lexicon Pharmaceuticals (LXRX 5.61%), and Zumiez (ZUMZ 6.28%) were among the best performers on the day.

Finisar looks brighter than ever

Finisar gained 13% after the company reported strong results in its fiscal first quarter Thursday night. The fiber optic communications specialist announced record revenue for the quarter, climbing 7% on strong demand for a wide range of products. Gross-margin figures improved as Finisar took advantage of its vertically integrated business model, and the company's outlook for the fiscal second quarter showed expectations for continuing growth.

In response, many analysts upgraded their views on the stock. As long as demand for greater connectivity continues, Finisar should have tailwinds helping it grow faster for the foreseeable future.

Lexicon gets a big win

Lexicon Pharmaceuticals climbed 17% in the wake of the release of results in its Phase 3 clincial trial of its sotagliflozin treatment for type 1 diabetes patients. The study revealed that the drug had a statistically significant improvement in reducing A1C glucose levels without increasing instances of severe hypoglycemia, which is a complication that often arises in managing blood sugar levels in those suffering from type 1 diabetes. Lexicon and partner Sanofi (SNY -1.88%) hope that sotagliflozin might also have positive impacts for treating patients with type 2 diabetes, and further studies could add to the good news for Lexicon and its partners.

Zumiez makes the best of a tough situation

Finally, Zumiez gained 5%. The retailer reported a fiscal second-quarter loss Thursday night, but the extent of its red ink was less severe than most investors had expected. Revenue inched downward by about 1% on a 4.9% decline in comparable sales, and the company reported a net loss of $0.03 per share, reversing a year-ago profit.

CEO Rick Brooks was disappointed by the fact that Zumiez isn't doing as well as the company's own internal long-term expectations, but efforts to control costs helped the retailer cut its losses. In addition, the acquisition of Australian retailer Fast Times Skateboarding at the end of August could help bolster Zumiez as a global player, in addition to providing some further geographical diversification to its business.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Stocks Mentioned

Finisar Stock Quote
Sanofi Stock Quote
$45.01 (-1.88%) $0.86
Lexicon Pharmaceuticals Stock Quote
Lexicon Pharmaceuticals
$2.26 (5.61%) $0.12
Zumiez Stock Quote
$23.20 (6.28%) $1.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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