The stock market has been moving in the right direction this month, and Wednesday continued the upward trend. As of 11:45 a.m. ET, the Dow Jones Industrial Average (^DJI 0.77%) was up 270 points to 35,733, the S&P 500 (^GSPC 1.29%) was up 52 points to 4,573, and the Nasdaq Composite (^IXIC 1.71%) was up 216 points to 14,411.
Yet even as the markets moved higher, a couple of individual stocks made downward moves that were problematic. Among larger companies, CVS Health (CVS -0.98%) found itself on the losing side of the equation after posting guidance in its quarterly financial report that didn't inspire confidence among investors. Meanwhile, observability platform specialist New Relic (NEWR) has been a higher-growth company, but an earnings miss sent the tech stock sharply lower.
CVS can't give a healthier outlook
Shares of CVS Health lost more than 5% on Wednesday morning. The drugstore chain operator's fourth-quarter results were solid, but investors had reason to be concerned that it won't maintain its recent growth pace.
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Revenue climbed 10% to $76.6 billion, while adjusted earnings of $1.98 per share were up by more than half from year-ago levels. That closed a solid 2021 for CVS, which included a 9% rise in sales for the full year, and adjusted earnings of $8.40 per share.
However, investors didn't seem comfortable with the minor changes management made to its guidance for 2022. CVS confirmed that it still expects adjusted earnings per share in the $8.10 to $8.30 range, but it now forecasts cash flow from operations will land in the range of $12 billion to $13 billion -- as much as $500 million lower than it previously expected.
CVS has been a strong performer over the past year, but it has hit a bit of a rough patch more recently. That might be enough to give value investors the motivation to take a closer look at the pharmacy giant in 2022.
New Relic falls hard
Meanwhile, shares of cloud-based software company New Relic suffered a much bigger drop. The data platform provider's stock plunged by 29% after its fiscal third-quarter report disappointed shareholders.
For the period, which ended Dec. 31, the company's numbers were mixed. Revenue increased 22% year over year to $204 million, and New Relic's active customer count rose by 700 to 14,600. Its net revenue retention rate rose to 116% -- its highest level in more than a year -- and the number of customers spending $100,000 or more with the company jumped by more than 150 to 1,064. However, its adjusted loss widened to $0.18 per share, and its remaining performance obligations rose by just 2% from where they were three months ago.
Moreover, New Relic expects its growth will slow further. Fiscal fourth-quarter revenue is likely to be up just 18% to 19% year over year, with a similar adjusted loss expected. For its full fiscal 2022, it is guiding for revenue of $784 million to $786 million, which would amount to an annual increase of just 17% to 18%.
High-growth companies saw their shares bid up for much of 2021 because of their impressive prospects. The realization that companies like New Relic might have to accept less speedy sales gains has hit their stock prices hard, and there could be other companies that will face the same fate as New Relic in the not-too-distant future.
