Wednesday was a generally favorable day on Wall Street, as market participants focused their attention on perceived progress with key issues including avoiding a government shutdown and resolving trade tensions between the U.S. and China. A reading on inflation in the U.S. showed a lack of pricing pressure, freeing up the Federal Reserve to be more accommodative with its monetary policy if it chooses. Yet among individual stocks, some companies struggled due to earnings-related problems. Teva Pharmaceutical Industries (NYSE: TEVA), McDermott International (NYSE: MDR), and Groupon (NASDAQ: GRPN) were among the worst performers. Here's why they did so poorly.
Teva can't live up to expectations
Shares of Teva Pharmaceutical Industries dropped 8% after the drug giant reported fourth-quarter and full-year 2018 financial results. Teva saw revenue fall 16% during 2018 compared to 2017 levels, with generic competition for blockbuster drug Copaxone detracting substantially from top-line performance, and adjusted net income was down by more than 25% over the same period. CEO Kare Schultz tried to keep a positive viewpoint, characterizing 2018 as the first step of Teva's restructuring, but 2019 will see similar challenges. Investors aren't feeling patient about Teva's prospects, and that could lead to further share-price pressure as the year progresses.
Image source: Teva Pharmaceutical Industries.
McDermott deals with overruns
McDermott International saw its stock plunge nearly 27% following bad news surrounding its role in a liquefied natural gas (LNG) terminal project in Louisiana. The engineering company said that it will have to report a substantial charge in the fourth quarter to account for lower-than-expected productivity from workers at the Cameron LNG project, as well as higher costs for subcontractors and construction management. McDermott did say that Cameron is on track to hit milestone deadlines on its way toward an eventual capacity of 14 million tons of LNG, but investors weren't happy at the prospect that the company might not reap the full rewards from its role in the project.
Groupon can't get a good deal
Finally, shares of Groupon finished lower by 11%. The company once known for its daily deal offers said that revenue fell 8% during the fourth quarter of 2018 compared to the year-earlier period, and despite a more than 40% rise in adjusted net income, Groupon wasn't able to muster as much bottom-line growth as investors had wanted to see. CEO Rich Williams blamed "a challenging operating environment" for the company's struggles, but even with efforts to keep reinventing itself, it will have trouble bouncing back quickly. Until conditions in the industry improve, Groupon could find it difficult to claw back much of its lost ground.
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