Among the biggest losers in Friday's early trading are
Blyth (
BTH
)
,
athenahealth (Nasdaq: ATHN)
and
Banco Bilbao Vizcaya (
BBVA
)
.
|
Top Percentage Losers -- Friday, June 4,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Loss
|
52-Week High
|
52-Week Low
|
| Blyth (
BTH
) |
$40.96 |
-17.5
%
|
$59.93 |
$25.91 |
athenahealth
(Nasdaq: ATHN) |
$23.76 |
-8.6%
|
$47.82 |
$23.29 |
| Banco Bilbao (
BBVA
) |
$9.25 |
-7.6
%
|
$19.78 |
$9.18 |
|
*Table includes companies with minimum market
capitalizations of $200 million and three month trading
volumes of at least 100,000 shares. All percentage returns
are listed as of 10:48AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
Blyth Confesses
Until about five years ago, companies would not hesitate to update
their guidance in the middle of a quarter. Once they received fresh
intra-quarter sales data, they sought to quickly disseminate it for
fear of violating Reg FD (Regulation Full Disclosure, which was put
in place ten years ago to ensure that all investors were dealing
with the same information). Well, the Securities and Exchange
Commission (
SEC
) and Nasdaq never really enforced this aspect of Reg FD, and
companies eventually chose to just wait until each quarterly
earnings release to update sales trends and guidance.
In that vein, kudos to
Blyth (
BTH
)
, a maker of scented candles, for quickly alerting investors that
sales forecasts will not be met. The company is seeing its shares
pushed down more than -17% today, but just gained a bit of
credibility with investors. Much of the blame goes to the decline
in the Euro, and lower spending in general in Europe. This is a
factor that is not getting enough attention, either in analysts'
reports or in the financial media. Instead, many will wait until
mid-July, when earnings reports roll in, and many will profess
surprise that the weakening Euro is crimping profits for exporters.
Action to Take -->
Act now. Peruse the 10-K filings of your holdings and read the
section that discusses geographic sales exposure. If a stock
derives 25% or more of its sales in Europe, and analysts' estimates
have not come down, a negative "surprise" awaits come earnings
season .
-------------------------------------
athenahealth's Credibility Problem
For many corporate boards, it's viewed as essential that a
company's management holds a great deal of credibility with key
investors. So when investors grumble that management has lost their
trust, the board often moves to replace an executive with a fresh
face. It may not be fair to scapegoat one person for a company's
troubles, but that's how it goes. Usually the chief executive
officer (
CEO
) or president gets the axe, but in the case of
athenahealth (Nasdaq: ATHN)
, the chief operating officer (
COO
) is being asked to fall on his sword. The board is also certainly
aware that the company has lost half its value in just six months.
A COO is tasked with being sure that spending stays in line,
letting the CEO worry about sales growth. In its most recent
quarter, athenahealth confessed that expenses were rising too fast,
faster even than revenues. In fact, quarterly results have trailed
forecasts for three of the last four quarters, largely due to
runaway expenses. News of the COO's departure is pushing shares
down more than -8% in Friday trading, but some investors may come
to see the move as a positive.
If the company can rein in costs, investors may grow to warm to
this story. That's because athenahealth is well-positioned to
capitalize on the changing healthcare landscape. It provides an
internet platform for doctors so they can reduce their crippling
levels of paperwork while streamlining the claims process with
insurers. An increasing number of doctors are making the move to
electronic records management, which has enabled athenahealth to
boost sales at least +33% in each of the past four years. And sales
in 2010 and 2011 are still expected to grow at a respectable +25%
clip.
Action to Take -->
Those uncontrolled expenses, though, are crimping operating profit
margins. Profits are expected to be flat this year at around $0.50
a share. Yet if the new COO can get a grip on costs, per-share
profits could surge more than +50% in 2011. With today's sell-off,
shares now trade for about 25 times projected 2011 profits, the
lowest forward multiple the company has seen in its three-year
history as a public company. With a still-strong growth profile,
investors are likely to warm up to this stock again in coming
quarters. Shares may move back into the $30s once athenahealth
proves it can actually exceed profit forecasts.
-------------------------------------
An Unfriendly Reminder from Europe
European bank stocks are taking in on the chin today, reminding
U.S. investors that the Gulf Coast oil spill and tepid U.S.
employment growth are not the only major investor concerns right
now. Spain's
Banco Bilbao (
BBVA
)
and
Banco Santander (
STD
)
are both off more than -7% to new 52-week lows, while the
Netherlands' ING (
ING
)
is of by a commensurate amount.
Action to Take -->
U.S. markets are unlikely to mount a fresh rally until investors
sense that the European banking sector has stabilized. To the
extent that European banks run into deeper trouble than is
currently expected, then equities around the world may get dragged
down in sympathy. Keep a close eye on this all-important
sector.
-- David Sterman
Staff Writer
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.