What Good News?
Is there any doubt that the markets lead the analysts? Shares in
Priceline.com sold off Monday even as the name-your-price Web retailer beat
Street expectations for the second quarter and affirmed analyst forecasts for
profitability by year’s end.
If you must use analyst research, use
it to understand a company’s story and fundamentals. But never use analyst
research to time your buy or sell decisions.
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In late June, I pointed out that Pricline
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PowerRating) had remained in a
downtrend despite a high-profile advertising campaign. Advertising blitzes can
sometimes feed demand for stocks.
On Monday, the Norwalk, Conn.-based company posted a Q2 loss of a penny a
share vs. a year-ago loss of 10 cents and analyst estimates averaging out to a
loss of 2 cents, according to First Call/Thomson Financial.
The stock tumbled 8 15/16 to a new low of 31 1/8 on more than five times its
usual trade. In other words, the market has found cause to value this company at
new low, and institutions are bailing. That portends further losses ahead. The stock also closed near the low
of the session, another bearish sign.
It will be interesting to see the
market’s reaction tomorrow to quarterly results from Affymetrix
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PowerRating).
After Monday’s close, the supplier of genetic testing technology reported an
operating loss of 22 cents a share vs. 33
cents a year ago and analyst estimates averaging 15 cents a share.
If
there ever was a sector driven by stories rather than fundamentals, it’s the
biotech sector. Ahead of the news, the stock had been basing nicely and had
tightened the past two weeks. In after-hours trade, Affymetrix shares changed
hands at 178 11/16 vs. Monday’s close of 194 1/2.
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