Friday was a great day on Wall Street, with the Dow climbing by more than 140 points and broader benchmarks rising even more on a percentage basis. Market participants celebrated the Republicans' apparent success in coming up with a tax reform package that could get passed by both the House and Senate as early as next week, and the corresponding drop in corporate taxes could bolster earnings for stocks beginning in 2018. Yet some companies still missed out on the rally, and CSX (CSX 1.72%), Fitbit (FIT), and Sirius XM Holdings (SIRI 1.07%) 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.
CSX investors worry about its CEO
Shares of CSX dropped nearly 8% following news that CEO Hunter Harrison has taken a medical leave due to unforeseen complications from a recent illness. The railroad giant said that COO James Foote will take over as acting CEO during Harrison's absence. Foote tried to reassure investors that much of the tough work in helping to transform CSX into a more efficient and successful railroad has already been accomplished, making it unlikely that Harrison's absence will have any negative impact on CSX's expectations for future progress. Nevertheless, investors weren't entirely comfortable seeing a new engineer at the front of the CSX train, and they're hoping that Harrison will come back better than ever in the near future.
Fitbit takes a hit
Fitbit stock declined almost 8% in the wake of a negative analyst report about the wearable fitness device maker. Analysts at Stifel dropped their rating on the stock from hold to sell, maintaining their share price target of $6. Stifel acknowledged that Fitbit has come out with new products during the past year, but the analysts believe that those products failed to break enough new ground to spur the business toward profitability in the near future. With rising competition in the wearables space, Fitbit needs to move aggressively in order to protect its business and try to maintain its perceived leadership role in the industry.
Higher royalties could plague Sirius XM
Finally, shares of Sirius XM Holdings fell 5%. The satellite radio specialist will have to start paying more in royalties beginning in 2018 for its music content, with the Copyright Royalty Board raising the royalty percentages from 11% to 15.5%. Sirius didn't offer any estimates of specifically how much more it might have to pay, presumably because the satellite provider will take steps to substitute high-royalty content with alternatives in order to cut costs. Nevertheless, for a company that's already dealing with competition on multiple fronts, news of higher expenses came as an unwelcome shock for a stock that had been on the ascendancy for much of the year.