Please ensure Javascript is enabled for purposes of website accessibility

Why Cognizant Technology Solutions, Pier 1 Imports, and Ophthotech Slumped Today

By Dan Caplinger – Sep 30, 2016 at 7:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Even on a strong day for the market, these stocks fell. Find out why.


Image source: Pier 1 Imports.

Friday was a strong day for the stock market, with major market benchmarks making up most of their lost ground from Thursday's session and finishing up almost 1%. The day marked the end of the third quarter, and solid gains for stocks meant that investors got through another year without seeing a major September downward surprise.

Greater confidence in the health of German banking giant Deutsche Bank helped allay fears of a possible European financial crisis brewing, and less fear meant that the ProShares Ultra VIX Short-Term Futures (UVXY 0.78%) lost 7.5%, as volatility fell. Even though the market was higher, several stocks lost ground, and Cognizant Technology Solutions (CTSH 1.48%), Pier 1 Imports (PIRRQ), and Ophthotech (ISEE -0.83%) were among the biggest decliners on the day.

Cognizant takes a hit

Cognizant Technology Solutions fell 13% in the wake of an internal corruption probe and the replacement of company president Gordon Coburn, who resigned. The technology services provider and consultant said that it was looking at possible violations of the Foreign Corrupt Practices Act linked to its operations in India, notifying the U.S. Department of Justice and the SEC that it had taken action.

At this point, Cognizant wasn't able or willing to make predictions about what the investigation would find, but investors didn't wait to put pressure on the stock. Some analysts downgraded Cognizant, in part because of the uncertainty that the probe introduces going forward.

Pier 1 gives back its gains

Pier 1 Imports dropped 5%, giving back its gains from Thursday following its fiscal second-quarter financial report. The retailer had reported a smaller loss than most investors had expected, but Pier 1 still suffered a nearly 7% drop in revenue on a comparable-store sales decline of 4.3%.

The company's guidance for the full fiscal year included top-line contraction of 4% to 6% and negative comps of -2% to -4%, but the real surprise isn't so much that the stock dropped today, but rather that it gained ground yesterday. Going forward, Pier 1 will have to work harder to stand out from the retail crowd in a tough industry environment in order to get its stock moving in the right direction.

Ophthotech takes collateral damage

Finally, Ophthotech took a 15% hit. The company itself didn't have any news, but industry peer Regeneron Pharmaceuticals (REGN 0.12%) announced results of a phase 2 clinical trial that showed that a combination of its already-approved blockbuster eye drug Eylea and a developmental-stage drug performed worse than using Eylea alone. Because the second Regeneron drug is in the same class of treatments as Ophthotech's top prospect, Fovista, investors fear that the study's results could bode ill for Fovista's potential, as well. With Ophthotech in the middle of phase 3 trials of its own, shareholders will have to wait and see whether Fovista can distinguish itself despite Regeneron's bad news.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Cognizant Technology Solutions. The Motley Fool is short Pier 1 Imports. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cognizant Technology Solutions Stock Quote
Cognizant Technology Solutions
CTSH
$60.92 (1.48%) $0.89
Pier 1 Imports Stock Quote
Pier 1 Imports
PIRRQ
Regeneron Pharmaceuticals Stock Quote
Regeneron Pharmaceuticals
REGN
$736.23 (0.12%) $0.87
ProShares Ultra VIX Short-Term Futures ETF Stock Quote
ProShares Ultra VIX Short-Term Futures ETF
UVXY
$7.74 (0.78%) $0.06
IVERIC bio, Inc. Stock Quote
IVERIC bio, Inc.
ISEE
$21.56 (-0.83%) $0.18

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.