Investors have had a hard time navigating the current stock market environment, and Friday didn't seem likely to bring any obvious answers to resolve the many uncertainties plaguing Wall Street right now. Futures on the Nasdaq Composite (^IXIC 0.68%) were all over the map in premarket trading Friday morning, as many investors reacted negatively to bad news from athletic footwear and apparel giant Nike in its most recent quarterly financial report.
Nike's premarket losses of 13% were extreme, but it turns out that there were two Nasdaq stocks with even bigger declines early Friday. Both Intercept Pharmaceuticals (ICPT) and Rent-A-Center (RCII 0.67%) posted steeper drops as they tried to work through some major setbacks and reassure their shareholders that the future could improve.
Intercept sees a study fail
Shares of Intercept Pharmaceuticals fell 15% in premarket trading Friday. The biopharmaceutical company got bad news from a study that it hoped would expand its prospects for a key pipeline treatment.
Intercept announced that its phase 3 trial of obeticholic acid (OCA) in treating patients with compensated cirrhosis due to nonalcoholic steatohepatitis (NASH) failed to meet its desired primary endpoint. The biopharmaceutical company had hoped that OCA would produce a greater than one-stage histological improvement in fibrosis with no further worsening of NASH conditions over an 18-month regimen of therapy. However, the rate of improvement failed to exceed that of placebo by a statistically significant amount.
The company did try to draw some positives from the study, though. It did note a positive impact on liver stiffness in both arms of the study, and OCA's safety profile still looked reasonably favorable.
Intercept will move forward with its planned New Drug Application based on earlier phase 3 data in a study of liver fibrosis patients that was more favorable. The company asserts that its application won't be affected by the latest trial results, but shareholders seem to have wanted more unambiguous signs of OCA's efficacy more broadly.
Consumers make Rent-A-Center fall short
Shares of Rent-A-Center also suffered a 15% decline in Friday's premarket. The rent-to-own retail specialist announced a leadership change and updated its financial guidance for the third quarter.
Rent-A-Center pointed to deteriorating external economic conditions that have affected both its traffic levels at its stores and the ability of its customers to pay. Given that Rent-A-Center's customer base is especially sensitive to the high inflation levels that the economy has seen lately, the retailer cut its earnings projections by about $0.20 to $0.30 per share, setting a new range of $0.85 to $0.95 per share on an adjusted basis.
The company is still confident that revenue could hold up reasonably well. It did trim the upper end of its previous sales guidance range by $35 million to $1.02 billion, but it left the lower end unchanged at $1 billion. CEO Mitch Fadel also emphasized his continued confidence that Rent-A-Center will be able to stay resilient even in the face of a potential economic downturn.
Still, with Rent-A-Center also saying that CFO Maureen Short had left the company on Sept. 28, shareholders were left with a somewhat unsettling feeling about what the near future will bring. Even as Santander Consumer CFO Fahmi Karam moves in to take over the CFO role at the end of October, Rent-A-Center will still have to navigate choppy macroeconomic conditions well to ensure its business can stay strong.
