Why Intuitive Surgical, Walter Energy, and WD-40 Tumbled Today

Even big gains for the stock market after a favorable Fed announcement couldn't save these stocks from big losses. Find out the details here.

Dan Caplinger
Dan Caplinger
Apr 9, 2014 at 8:30PM

The stock market soared on Wednesday, as initially strong sentiment from investors got an extra push higher after the minutes of the Federal Open Market Committee's March meeting showed greater willingness among policymakers to keep interest rates relatively low for a longer period of time. Yet even though the Dow, S&P, and Nasdaq all posted gains of 1% to 2%, Intuitive Surgical (NASDAQ:ISRG), Walter Energy (NASDAQOTH:WLTGQ), and WD-40 (NASDAQ:WDFC) were among the worst performers of the day, all falling by 5% or more.

Source: Intuitive Surgical.

Intuitive Surgical's 7% drop came after the robotic-surgery specialist warned on its first-quarter earnings last night. Intuitive Surgical expects that revenue will drop by almost a quarter from year-ago levels, missing what investors had expected by about 13%. Systems sales will be the biggest contributing factor, with a drop of almost 60%. The big question going forward will be whether Intuitive Surgical will get a boost in sales from its new da Vinci Xi system upgrade, which the FDA cleared after Intuitive Surgical's quarter ended. If that view from the FDA turns sentiment about the da Vinci around, then today's drop could be a huge buying opportunity for Intuitive Surgical.

Walter Energy fell 6%, with its coal-mining peers also suffering substantial gains after one analyst team downgraded a host of coal stocks this morning. The problem that analysts see as being particularly acute at Walter Energy is the poor environment for metallurgical coal. Although some other experts believe that thermal coal might finally be bottoming out, steel production hasn't yet picked up sufficiently to make a similar call for met coal. Given Walter's emphasis on metallurgical coal, it will have the hardest time getting through an extended period of weak pricing in the space.

WD-40 declined 6.5% after the industrial and household lubricant-maker released its fiscal second-quarter earnings report last night. Sales for the maker of the company's namesake product jumped 9% from the year-ago quarter, which was somewhat stronger than investors had expected, but earnings fell 1%. Strength in its Americas and Europe-Middle East-Africa-India segment led to double-digit sales increases in those areas, but a huge plunge of 21% in Asia-Pacific sales weighed on overall revenue growth. WD-40 cited high backlogs, poor currency impacts, and Chinese economic uncertainty for the region's woes. Yet investors apparently weren't satisfied with those results or its guidance for the remainder of the fiscal year, on which it repeated prior expectations for net sales and income.