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Why Arista Networks, Dropbox, and MBIA Slumped Today

By Dan Caplinger - Apr 13, 2018 at 4:44PM

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Find out which of these companies got poor reviews from stock analysts.

The stock market finished lower on Friday, with triple-digit losses for the Dow Jones Industrial Average and modest declines of as much as half a percent for other major benchmarks. A mix of economic and political news kept investors on their toes to end the week, as fears of a possible attack on Syria watered down some of the potential upside that could have stemmed from solid earnings results from the banking sector during the morning. Even though many investors have pretty positive expectations going into earnings season, some companies suffered from disappointing news that sent their shares lower. Arista Networks (ANET 2.73%), Dropbox (DBX 4.87%), and MBIA (MBI 1.70%) were among the worst performers on the day. Here's why they did so poorly.

Arista takes a hit

Shares of Arista Networks dropped 9% after the network technology specialist got a downgrade from a stock analyst company. Analysts at Cleveland Research cut their rating from buy to neutral, arguing that increasing competition could eat into some of Arista's recent success in the industry. As other industry rivals ramp up their capacity, Arista will have to work hard to defend its share of sales to key tech customer giants in the cloud computing and internet space. With investors already on edge because of Arista's conservative guidance for 2018, the analyst downgrade added fuel to the fire for those who aren't as confident about the network company's prospects.

Arista Navigator sample screenshot provided by company.

Image source: Arista Networks.

Dropbox drops

Dropbox stock lost 10% in the wake of getting negative analyst comments of its own. Analysts at Nomura initiated coverage of the cloud storage specialist by issuing a rating of "reduce" on the stock, setting a $21-per-share price target that's still 30% below where the shares closed Friday. Although Dropbox will likely be able to force existing online storage companies to cut their prices and suffer margin compression as a consequence, analysts aren't as confident that Dropbox will successfully claim its own share of profitable business. The stock has seen considerable volatility since its IPO less than a month ago, and investors should prepare for more turbulence as they wait for financial results from Dropbox.

MBIA gives back its gains

Finally, shares of MBIA fell 14%. The bond insurance company had seen its stock spike in recent days, perhaps on news that prices of Puerto Rican bonds had appreciated substantially in the past few months on hopes that the island territory will be able to restructure its extensive debt successfully. That could be good news for MBIA, which has had to manage its Puerto Rican exposure throughout its debt crisis. Even with today's losses, MBIA stock is still up more than 35% in the past six months, and many see better times ahead for the insurance company.

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Stocks Mentioned

MBIA Inc. Stock Quote
$13.77 (1.70%) $0.23
Arista Networks, Inc. Stock Quote
Arista Networks, Inc.
$103.71 (2.73%) $2.76
Dropbox Stock Quote
$20.89 (4.87%) $0.97

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

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