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Why Zoe's Kitchen, Beazer Homes, and BioCryst Pharmaceuticals Slumped Today

By Dan Caplinger – Updated May 26, 2017 at 5:10PM

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The market held up well to finish a strong week, but these stocks fell. Find out why.

The stock market finished Friday with minimal change, hanging onto almost all of its extensive gains for the full week. Investors have proven to be unflappable recently, and even geopolitical pressures stemming from President Trump's appearance at Italy's G7 summit didn't cause any consternation in the financial markets. With earnings season coming to an end, most are now looking at whether the Federal Reserve will keep acting to tighten monetary policy at its June meeting. Yet despite relatively solid optimism about the market's prospects overall, some stocks lost ground. Zoe's Kitchen (ZOES), Beazer Homes (BZH -3.20%), and BioCryst Pharmaceuticals (BCRX -0.86%) 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 can't serve up a good quarter

Shares of Zoe's Kitchen fell 12.5% after the Mediterranean restaurant chain's first-quarter financial report failed to live up to the expectations of investors. Zoe's saw its sales climb almost 13%, but that was weaker than most of those following the stock had expected, and a 3.3% decline in comparable-restaurant sales was also disappointing. Operating income dropped by almost two-fifths, and Zoe's had to reduce its full-year sales and comps guidance, now expecting comparable-restaurant sales that at best will be flat and could fall as much as 3%. The $5 million to $11 million reduction in revenue guidance took the new range to $314 million to $322 million, and that disappointed growth-oriented investors who don't want to see continued slowdowns. Until Zoe's re-establishes its former pace of growth, many shareholders will have doubts about the company's future.

Zoe's Kitchen catering service.

Image source: Zoe's Kitchen.

Beazer gets a bad review

Beazer Homes stock dropped 8.3% in the wake of an analyst downgrade. Analysts at JMP Securities cut their rating on the homebuilder from market perform to underperform, and they put a $12-per-share target on the stock, working out to about 8% more downward pressure on the stock even after today's decline. Beazer has actually done a fairly good job of sustaining positive performance even as mortgage rates have risen from their recent lows, and in its most recent quarter, Beazer posted sales gains of nearly 12%. Many have been nervous about how much longer the housing market can expand, but at least for now, Beazer has defied skeptics, and it's entirely possible that JMP will prove to have been wrong -- or at least early -- in its negative call on the homebuilder stock.

BioCryst gives back some of its gains

Finally, shares of BioCryst Pharmaceuticals ended the day down 14.3%. However, the downward move followed Thursday's 31% jump in the stock, stemming from favorable analysis results for its BCX7353 candidate treatment for hereditary angioedema. The good news included no serious safety problems connected with the drug and reductions in frequency of attacks when taking the medication. Yet some investors expect BioCryst to take advantage of the run-up in its stock to raise cash through a secondary offering, and that -- along with some profit-taking from traders -- might have justified today's decline. Even after the drop, BioCryst still has gained more than 13% in the past two days, and many see more upside for the small biotech going forward.

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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