On Friday, investors were refusing the pill that is generic-drug specialist Lannett (LCI). The company's shares took a painful hit, sinking by 13% after the company got the toss from a high-profile stock index.
After market close Thursday S&P Dow Jones Indices, the company responsible for the closely followed S&P suite of securities indexes, announced a set of adjustments to three of its stock indicators. Unfortunately for Lannett, as a result of these changes, its stock will no longer be a component of the S&P SmallCap 600 index.
Its place is being taken by real estate investment trust (REIT) Service Properties Trust (SVC 3.63%). The index manager's changes become effective before market open next Friday, June 4.
Lannett became a component the S&P SmallCap 600 index in 2014. It hasn't been a popular stock lately, falling by 33% since the beginning of this year.
What didn't help was the pharmaceutical company's third-quarter results, published earlier this month. The company's net sales fell by 22% year over year to $112 million, and although it narrowed its net loss considerably to just over $7.1 million, it still fell well short of analyst expectations.
While inclusion on, or exclusion from, a high-profile stock index doesn't directly affect a company's fundamentals, it does impact its reputation and visibility. Given its S&P SmallCap 600 index chop, on the back of that lackluster Q3, Lannett has much work to do to restore the confidence of investors.