Please ensure Javascript is enabled for purposes of website accessibility

Why American Outdoor Brands, MoneyGram International, and Community Health Systems Slumped Today

By Dan Caplinger - Jan 3, 2018 at 4:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Find out how a failed takeover hit one of these stocks hard.

The stock market continued to surge on Wednesday, with just about every major benchmarks reaching unprecedented heights. Bullish sentiment spanned the globe as 2018 started on a positive note, and investors continue to anticipate strong earnings results when companies begin to report their fourth-quarter financials in the next few weeks. Yet even though stocks overall were generally higher, some lost ground. American Outdoor Brands (SWBI -5.59%), MoneyGram International (MGI -0.51%), and Community Health Systems (CYH -8.23%) 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.

American Outdoor misses the target

Shares of American Outdoor Brands fell 9% on a down day for gun stocks generally. The maker of Smith & Wesson firearms didn't perform very well in 2017, and it now trades at levels not seen in more than three years. The big problem for American Outdoor Brands has been that more accommodative policies from the White House and Congress have been in place lately, making the prospects for further regulation unlikely in the near future. That takes away the impetus for gun buyers to make purchases quickly. American Outdoor Brands has tried to pivot toward other products beyond guns, but Smith & Wesson still makes up a huge part of its overall sales. That will leave the stock exposed to weakness in gun demand until the next wave of potential regulation comes.

Smith & Wesson gun with silver body and black handle sitting on a white table, with a target behind it.

Image source: American Outdoor Brands.

MoneyGram gets bad news

MoneyGram International stock dropped 9% after the global payment service provider had a proposed acquisition blocked by U.S. regulators. MoneyGram had been looking to move forward with a $1.2 billion bid from China's Ant Financial, but the Committee on Foreign Investment in the United States chose not to approve the proposed transaction. As a result, Ant Financial terminated its merger agreement. Although the two companies said they will work together on less extensive strategic initiatives, shareholders were still disappointed. As MoneyGram CEO Alex Holmes said, "The geopolitical environment has changed considerably since we first announced the proposed transaction," and investors will have to get used to MoneyGram seeking to thrive as an independent entity for the foreseeable future.

Community Health lags behind

Finally, shares of Community Health Systems declined 8%. The hospital operator was the recipient of negative comments from analysts at Goldman Sachs, who gave Community Health an initial rating of sell. They noted that Community Health has extensive debt, and it hasn't done a good job of keeping up with other peers in its industry. Goldman set a $3 per share price target on the stock, which implies that the share price could drop another 25% to 30% from current levels. With healthcare still in flux, Community Health faces challenges that it will need to overcome in order to allay investors' concerns.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Community Health Systems, Inc. Stock Quote
Community Health Systems, Inc.
$5.91 (-8.23%) $0.53
Smith & Wesson Brands, Inc. Stock Quote
Smith & Wesson Brands, Inc.
$13.51 (-5.59%) $0.80
MoneyGram International, Inc. Stock Quote
MoneyGram International, Inc.
$9.68 (-0.51%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.