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Why Zoe's Kitchen, GOL, and Sarepta Therapeutics Slumped Today

By Dan Caplinger – May 22, 2017 at 4:55PM

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Despite a rising market, these stocks fell. Find out why.

Overall, stocks did well on Monday, and the Dow climbed 90 points even as other major benchmarks posted similar or slightly larger percentage gains. Market participants seemed to be heartened by President Trump's performance on the first overseas visit of his administration over the weekend, and most investors were content to wait for clearer gauges of whether the U.S. economy is still as healthy as it has been in recent years.

Yet some stocks didn't participate in the rally, instead contending with negative news of their own. Zoe's Kitchen (ZOES), GOL Lineas Aereas Inteligentes (GOL -1.61%), and Sarepta Therapeutics (SRPT -0.15%) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.   

Zoe's Kitchen catering spread

Image source: Zoe's Kitchen.

Zoe's gets a bad review

Shares of Zoe's Kitchen fell more than 8% after getting a downgrade. Analysts at Baird cut their rating on the restaurant-chain stock from outperform to neutral, and they reduced their price target by 20% to $20 per share. The analysts pointed out that Zoe's is likely to have to deal with higher ingredient costs for its menu items, and that could put pressure on the company's earnings when Zoe's reports its first-quarter results later this week. Tough conditions in the restaurant industry have already weighed on the company, and Zoe's shares are at their worst levels in its short history as a public company. Without a quick turnaround, it could be difficult for Zoe's Kitchen to regain investors' confidence going forward.

GOL flies lower

GOL Lineas Aereas Inteligentes stock hit an air pocket, dropping 10%. The Brazilian airline has found its stock closely tied to the fortunes of the nation's domestic economy, and new concerns about the sustainability of the recent rebound in Brazil have hit the broader stock market in Latin America's largest nation. In particular, a political crisis has weighed on Brazilian stocks over the past week, with allegations that President Michel Temer had sought to bribe a witness causing Brazil's Bovespa index to lose more than 15% in a single day last week. Today's drop returned GOL shares to their lowest levels during last week, and it will take greater stability in Brazil for the airline to expect a full bounce back from its latest woes.

Sarepta gives back some ground

Finally, shares of Sarepta Therapeutics declined nearly 6%. The biopharmaceutical company saw an end to the recent hype surrounding its selection as a stock recommendation from money management professionals at the SkyBridge Capital SALT hedge fund conference last week, which had vaulted Sarepta shares higher. The company has seen solid success from its Exondys 51 treatment for Duchenne muscular dystrophy, and many investors believe that the potential for greater sales is much higher than most give the company credit for having. With well-known hedge fund managers like Tourbillon Capital Partners CEO Jason Karp arguing for huge upside for the shares, Sarepta posted nice gains last week. For now, investors look to be taking profits, but in the long run, Sarepta still has just as much promise to cash in on blockbuster drugs in the future.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Zoe's Kitchen. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Sarepta Therapeutics Stock Quote
Sarepta Therapeutics
$114.57 (-0.15%) $0.17
GOL Linhas Aereas Inteligentes Stock Quote
GOL Linhas Aereas Inteligentes
$3.05 (-1.61%) $0.05
Zoe's Kitchen, Inc. Stock Quote
Zoe's Kitchen, Inc.

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