Please ensure Javascript is enabled for purposes of website accessibility

Why Balchem Corp.'s Shares Plunged 10.7% Today

By Travis Hoium - Mar 8, 2016 at 3:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst downgrade crushed the food supplier.

Image source: Balchem.

What: Shares of food ingredient company Balchem (BCPC 2.22%) dropped as much as 10.7% Tuesday after the stock was downgraded by an analyst.

So what: Analysts at Sidoti cut  Balchem's rating from buy to neutral Tuesday, but left the price target for the stock unchanged at $71 per share. On Feb. 29, the company reported fourth-quarter earnings results that showed an 18.4% drop in sales and a 17.7% decline in net income.  

Now what: When an analyst changes their view of a stock, the news can send it swinging wildly higher or lower, but, long term, this is just noise for investors. Analysts on Wall Street typically aren't incentivized to make accurate stock picks, and historically, they don't beat the market. So there's no reason to panic over this move.

What will be important is to keep an eye on how Balchem's revenue and earnings trend in 2016, because that will be the true driver of the company's stock in the long term. The declining market conditions are expected to turn around this year, but if they don't, it may be time to reexamine the company's prospects.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Balchem Corporation Stock Quote
Balchem Corporation
$131.80 (2.22%) $2.86

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.