Wednesday was generally a good day for the stock market, with major benchmarks posting solid gains. Broad measures like the S&P 500 and the Nasdaq Composite were up just modestly from Tuesday's close, but the Dow Jones Industrial Average enjoyed an impressive triple-digit advance on the back of its oldest tech component. Yet even though the general sentiment among market participants was positive, some stocks were held back. SUPERVALU (SVU), Synchronoss Technologies (SNCR), and Allergan (AGN) 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.
SUPERVALU's purchase doesn't impress investors
Shares of SUPERVALU dropped 12% after the company reported fiscal second-quarter financial results and announced an acquisition. The grocery store operator and distributor said that sales rose by more than a third from year-ago levels, thanks largely to a nearly 60% increase in revenue from the company's wholesale distribution segment following the acquisition of Unified Grocers. Yet the retail side of the business was weak, with same-store sales down 3.5%. SUPERVALU agreed to acquire Associated Grocers of Florida in a transaction worth about $180 million, letting SUPERVALU expand into a new part of Florida and opening up an international customer base in the Caribbean and elsewhere. Yet investors seem uncertain about SUPERVALU's new distribution emphasis, and they'd prefer to avoid seeing retail results come in so weak.
Synchronoss doesn't do enough with its strategy
Synchronoss Technologies stock finished down 11.5% in the wake of its announcement of what many investors considered to be too small a step to revive the cloud computing specialist's prospects. The company has been going through an exploration of strategic alternatives for months now, and it finally decided to sell its Intralinks unit to Siris Capital Group, which is already a major Synchronoss shareholder. Siris also agreed to invest $185 million in convertible preferred stock. The move earned Synchronoss a small profit on the financial services cloud platform provider, but because it ended the strategic alternatives process, shareholders were left without enough clarity about what exactly Synchronoss' future looks like.
Allergan keeps falling
Finally, shares of Allergan dropped another 5%, adding to losses from earlier in the week. Allergan has been under pressure for some time, as the maker of Botox has seen its stock shrink by more than a quarter just since late July. The decline has stemmed largely from two causes: a huge stake in ailing generic-drug maker Teva Pharmaceutical Industries (TEVA 0.34%) and concerns about the status of Allergan's blockbuster dry-eye treatment, Restasis. This week brought more bad news when a federal judge invalidated patents related to Restasis, raising the threat of potential generic competition. Until Allergan is able to understand more fully the potential impact of the adverse decision as well as other threats to the industry overall, investors seem to think that other stocks look more attractive.