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Although the professional consensus was that it
wouldn't sway the Federal Reserve much from its
aim to hold interest rates steady
for the foreseeable future, today's initial reaction to May's
firm inflation numbers said the market thinks a rate hike could
come sooner than later. By the time the closing bell rang though,
those early losses were wiped away, and turned into a 0.31% gain.
closed at 2077.99.
While the market mustered a modest rebound, owners of
American Airlines Group Inc
BioMarin Pharmaceutical Inc.
) weren't so lucky. These three stocks were among the worst
of the worst.
Here's a closer look at why none of them could buy a friend on
American Airlines Group Inc (AAL)
Already down 8% since this weekend's mass shooting at a gay
club in Orlando, Florida, Bank of America/Merrill Lynch fanned
the bearish flames for American Airlines Group today by
downgrading AAL from "Neutral" to "Sell." However, the downgrade
of AAL didn't stem from the likely quelling of travel plans in
the shadow of rekindled terrorism fear. Rather,
analyst Andrew Didora is concerned about the
airline's soaring debt
That said, Didora did acknowledge the potential impact the
terrorist attack may have, as well as the volatility that a
"Brexit" could create.
Bank of America/Merrill Lynch also
lowered its price target on AAL, from $42 to
, with today's 4% dip bringing it one step closer to that
BioMarin Pharmaceutical Inc. (BMRN)
Some say it's an overreaction. Others disagree with that
assessment. Whichever it is, it doesn't change the fact that
BioMarin Pharmaceutical fell nearly 4% on Thursday following
reports that the company had suspended recruitment for a trial of
its hemophilia drug BMN 270.
There was no official statement on the matter from the
company; one may or may not come at a later time. Rather,
interested parties simply noticed at website
www.clinicaltrials.gov that the study was being suspended
. More often than not though, such a suspension is a sign that a
trial had encountered unexpected problems, or failed to produce
the hoped-for results. In fact, BMRN had already suggested at one
point there may be some safety issues with BMN 270.
That's the point Evercore ISI analyst Mark Schoenebaum made
explaining after he actually spoke with company
"We spoke with the company, who confirmed that today's news on
clinicaltrials.gov is not new and that the posting of this update
to the website just took a few weeks. Recall, BioMarin has said
that they will need to speak with EU regulators prior to dosing
the last 3 gene therapy patients in the trial (expected by around
August) because one patient (#3) had an ALT elevation slightly
above his ULN (47 vs ULN of 41). This discussion with regulators
prior to dosing the last patients was meant to be an early safety
precaution and was self-imposed as part of BioMarin's protocol
for a first-in-human hemophilia A gene therapy."
Traders weren't sympathetic, however.
Cavium Inc (CAVM)
Last but not least, semiconductor maker Cavium saw its stock
plunge more than 17% after announcing it
was acquiring peer and rival
) for a cool $1.4 billion. QLGC shares, conversely, gained more
than 9% on the heels of the healthy offer.
The premise of the acquisition wasn't received well by
analysts either, with at least four of them downgrading CAVM
following the news. Canaccord Genuity analyst Matthew Ramsay
"While we believe this acquisition could prove technologically
prudent long term and adds important new elements to Cavium's
product portfolio, the deal brings with it a stark shift in
anticipated strategy given Cavium is just ahead of several new
product ramps and potentially lowers the long-term growth rate of
the company … given our anticipation of a more compressed
valuation until closer to realized merger synergies and given our
ongoing near-term concerns about lumpiness in the MIPS-based
business, we are downgrading Cavium shares from Buy to HOLD until
catalysts grow closer, and lowering our price target from $61 to
Still, a handful of analysts are bullish on CAVM in the wake
of the buyout. William Blair analyst Anil Doradla
expects the combined companies to grow at an
annual clip of 20%
on what is an undeniable change in direction for Cavium.
As of this writing, James Brumley did not hold a position
in any of the aforementioned securities.
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