Among the biggest losers in Tuesday's early trading are
Anadarko Petroleum (
APC
)
,
Regal Cinemas (
RGC
)
and
Halozyme Therapeutics (Nasdaq: HALO)
.
|
Top Percentage Losers -- Tuesday, June 1,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Loss
|
52-Week High
|
52-Week Low
|
| Anadarko (
APC
) |
$44.07 |
-15.8
%
|
$75.07 |
$40.28 |
| Regal Cinemas (
RGC
) |
$14.30 |
-5.1%
|
$18.49 |
$10.58 |
| Halozyme (Nasdaq: HALO) |
$6.97 |
-4.9
%
|
$32.71 |
$18.17 |
|
*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 10:58AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain dat
|
Drillers with Highest Gulf Exposure Hit Hardest
Shares of
BP (
BP
)
are getting pummeled again, off another -11% on Monday as investors
come to doubt that the flow of oil and gas can be stopped in the
near term. The longer it proceeds, the greater the potential
liability for the company. Rumors circulated that BP may become
takeover bait, but it's unclear why anyone would want to step in
and assume this mess.
The broader sector is also getting hit, especially for those oil
and gas drilling service companies with the highest amount of
exposure to the Gulf.
Anadarko Petroleum (
APC
)
, for example, is off nearly -15% on the session and has fallen
from around $75 per share to the mid $40s in just six weeks. Back
then, the stock was approaching two-year highs on the heels of very
strong March quarter results: The $0.83 in per-share profits nearly
doubled the analyst forecast.
The question then is if all of the problems will cause profits to
slump sharply in coming quarters. Oppenheimer's Fadel Gheit, a
long-respected oil analyst on the street, recently lowered his
expectations. He now thinks Anadarko will earn around $2.24 a share
this year, down from a previous view of $2.53. The 2011 per share
profit forecast was lowered about -20% to around $3. His new view
is in line with the consensus forecast, though the consensus is
likely to come down as well. Notably, analysts are all over the
map, with some seeing more than $6 in 2011 per share profits, with
others seeing profits closer to $1 a share.
And that highlights the conundrum for investors. Nobody can really
say how the current Gulf spill will play out. We know costs will
rise as added safety measures are taken, and we may see a boost in
natural gas prices and therefore revenue if planned new production
is likely to be stalled. But it's foolish to bottom-fish shares
until we get a little more clarity.
If you want to compile a list of the hardest hit stocks, look at
Tetra Technologies (
TTI
)
,
Hercules Offshore (Nasdaq: HERO)
, and
Dril-Quip (
DRQ
)
. All of these companies provide services and equipment to the big
drillers, and all have seen their shares fall another -10% today.
Action to Take -->
These stocks will eventually look like a bargain, but we're not
there yet.
-------------------------------------
Volatility and M&A Don't Mix
The biotech sector has seen a slew of deal-making in recent months,
thanks in large part to a positive market backdrop. But the
market's choppy sledding of recent sessions appears to have put an
end to the sector's M&A party for the moment. Micro-cap
CombiMatrix (Nasdaq: CBMX)
conceded as much by announcing today that its bankers are no longer
looking to do deals, pushing shares down double-digits.
Other biotechs that were rumored to be on the block are also
getting hit:
Halozyme Therapeutics (Nasdaq: HALO)
, which is already reeling from a recent drug recall, is off
another -5% today. Meanwhile,
Affymax (Nasdaq: AFFY)
, which is developing a treatment for anemia, is off nearly -8%.
Buyout rumors are getting little credence in this market
Action to Take -->
Biotech stocks had posted a strong run, with the
Biotech HOLDRS (
BBH
)
exchange-traded fund (
ETF
) rising sharply in February and March. Performance has sharply
lagged since then, as investors flee stocks with minimal near-term
profit prospects. Now that the "M&A play" is not a factor, the
group could fall further. Only when the market stabilizes and
starts trending upward will the group see some interest. If you
were looking at any biotechs, simply keep monitoring them. Be ready
to pounce when the market firms.
-------------------------------------
Regal Cinemas Reflects Box Office Slump
For the second straight weekend, movie attendance trailed analysts'
forecasts. And that's hitting shares of
Regal Cinemas (
RGC
)
, which are off more than -4% in Monday trading. As we noted last
week in our look at
Carmike Cinemas (Nasdaq: CKEC)
, ever-rising ticket prices are starting to make going to the
movies a costly family outing. This summer offers plenty of
family-friendly fare, but if box office results disappoint in the
all-important summer season, then investors may start to focus on
the balance sheets. Regal currently has about $2 billion in debt.
And though Regal should see few near-term liquidity concerns, this
is precisely the kind of stock that gets dumped in recessionary
times.
Action to Take -->
If you believe the economy may stall in coming quarters, then you
should lighten your positions in any stocks that carry lots of
debt. Their debt loads may be manageable, but as we saw in 2008 and
2009, investors tend to steer clear of these names when the economy
contracts.
-- David Sterman
Staff Writer
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.