Monday was a quieter day on Wall Street, and most major benchmarks stayed close to where they finished last week. The summer often brings days without much to drive markets in one direction or the other, and with the official start of earnings season still a week away, most investors seemed content with small moves. The technology sector did reasonably well, helping to lift the Nasdaq Composite to stronger gains of about 0.4%, but the S&P 500 and Dow Jones Industrials had to settle for roughly flat performance. Bad news from select companies led to share-price declines, and Macy's (M -2.03%), Cincinnati Bell (CBB), and LeMaitre Vascular (LMAT -1.62%) 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.
Macy's deals with another troubling trend
Shares of Macy's dropped 7% on a bad day for department store retailers in general. In the latest set of bad news for the ailing industry, department stores are now reportedly starting to offer discounts on cosmetics, a category that had long been a stalwart of price stability and consistent demand. With online retail posing an imminent threat to Macy's and its peers, cosmetics discounts might well represent a last-gasp effort to draw core customers back through department-store doors. The concern that Macy's investors should have is that any discounts that department stores can offer, online retailers can likely match. If the final solution to Macy's problems involves a race to the bottom, shareholders are unlikely to emerge victorious, no matter what happens.
Image source: Macy's.
Cincinnati Bell makes two buys
Cincinnati Bell stock fell 7% after the Ohio-based telecom company agreed to two purchases. The company will merge with Hawaii-based counterpart Hawaiian Telcom (NASDAQ: HCOM) in a transaction worth about $650 million. Under the terms of that deal, Hawaiian Telcom shareholders will get their choice of $30.75 in cash, 1.6305 shares of Cincinnati Bell stock, or a mix of $18.45 in cash and 0.6522 shares of stock. The overall deal is subject to restrictions that the overall amount paid must consist of 60% cash and 40% Cincinnati Bell stock. Also, Cincinnati Bell said that it would pay $201 million in cash for technology services and solutions provider OnX Enterprise Solutions. Cincinnati Bell said that the deals will help it grow its network communications and enterprise IT services businesses, but investors seemed concerned that the company might have overpaid in the transactions. With many expecting a wave of consolidation in the broader telecom space, the regional telecom company seems to be beating its rivals to the punch.
LeMaitre loses ground
Finally, shares of LeMaitre Vascular fell 13%. Analysts at two different stock analysis companies gave negative views on the medical device manufacturer's stock today. An analyst at Canaccord said that the stock was fully valued, downgrading the stock from buy to hold and keeping a $28-per-share price target. Analysts at Benchmark also cut LeMaitre from buy to hold, noting that a key executive departure could prove problematic for the stock, especially at its current high valuation levels. Investors have been excited about LeMaitre because of solid financial results and more optimistic guidance for the near-term future. Yet the stock has doubled in just a single year even considering today's drop, and some believe that the shares could be getting ahead of the company's fundamental prospects -- no matter how attractive they might become in the long run.
