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Why Teva Pharmaceutical Industries, Seadrill, and Nutanix Slumped Today

By Dan Caplinger - May 28, 2019 at 4:33PM

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Tough industry conditions took their toll on some stocks.

The stock market had another challenging session on Tuesday, coming off a long holiday weekend with ongoing concerns about what's ahead for the global economy. The geopolitical environment also remains a source of considerable uncertainty, and even U.S. companies that are experiencing relatively solid conditions in their home markets aren't entirely comfortable with whether they'll see deteriorating prospects in the near future. Some companies have already had to deal with bad news that sent their shares lower. Teva Pharmaceutical Industries (TEVA 1.93%), Seadrill (SDRL), and Nutanix (NTNX -2.18%) were among the worst performers. Here's why they did so poorly.

Teva makes a settlement

Shares of Teva Pharmaceutical Industries dropped more than 12% after the drugmaker said it had settled claims against it. Teva decided to pay $85 million to the state of Oklahoma to resolve a dispute concerning allegations that the pharmaceutical company played a role in the opioid crisis that's hit not only that state but also areas across the nation. However, investors were surprised at how big the settlement was. With a federal court trial in Cleveland coming soon, Teva said that it "remains prepared to vigorously defend claims against the company." Yet shareholders seem to be recalculating just how large the total liability for Teva might prove to be.

Person holding pill in blue-gloved hand, with dozens of other pills scattered on a glass table.

Image source: Getty Images.

Seadrill deals with weak oil prices

Seadrill's stock continued to lose ground, plunging another 23% in response to negative comments from analysts over the long weekend. Carnegie Investment Bank slashed its target price on the offshore drilling specialist by 88% to just 25 Norwegian kroner per share, or less than $3. Seadrill has a significant amount of debt on its balance sheet, and even though the company has made strides toward a recovery as oil prices have climbed from their lows a few years ago, Carnegie fears that improvements won't come fast enough to allow Seadrill to pay down or refinance its financial obligations. Unless crude oil can bounce back from recent setbacks, Seadrill will find it tough to move forward aggressively.

Nutanix gets a downgrade

Finally, shares of Nutanix fell almost 11%. The data storage specialist received negative comments from analysts at Morgan Stanley, who cut their rating on the stock from overweight to equal weight and slashed their price target by $16 per share to $37. The analysts identified potential competitors that are catching up with Nutanix and its technological capabilities. At the same time, though, Morgan Stanley acknowledged that the company's rivals are seeing challenges of their own, and that's raising fears of a broader downturn for the industry that could drag Nutanix down with it. Investors will get a better reading on the company's standing when Nutanix releases earnings results on Thursday.

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Stocks Mentioned

Teva Pharmaceutical Industries Limited Stock Quote
Teva Pharmaceutical Industries Limited
TEVA
$8.47 (1.93%) $0.16
SeaDrill Limited Stock Quote
SeaDrill Limited
SDRL
Nutanix Stock Quote
Nutanix
NTNX
$20.66 (-2.18%) $0.46
Morgan Stanley Stock Quote
Morgan Stanley
MS
$79.37 (-0.74%) $0.59

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

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