Why 4 of Last Night’s Biggest Losers Are Still Struggling in the Light of Day

There’s been no reprieve today for four stocks that were among the biggest losers in after-hours trading yesterday, as each gapped open lower today and continues to struggle in the harsh light of day. Let’s see what woes have afflicted these stocks and caused nightmares for its investors last night.

We’ll start with FireEye Inc. (NASDAQ:FEYE), which released an unexpectedly poor third quarter earnings report in yesterday’s after-hours session, along with weak fourth quarter guidance. While sales for the third quarter were strong at $166 million, a 45% year-over-year increase, and earnings beat estimates despite falling by 6% to a GAAP net loss of $0.88 per share, it was the internet security company’s weak guidance and billings that crushed its stock, which is down by 23.66% today. FireEye Inc. (NASDAQ:FEYE)’s billings came in at $210.6 million, 6.5% below the low-end of its guidance and even further below analysts’ estimates, while it slashed its full-year revenue and income guidance, with its projected non-GAAP net loss of $1.62 dwarfing the previous projected loss of $0.75.

After cresting $85 in late-February 2014, shares of FireEye Inc. (NASDAQ:FEYE) have lost over 70% of their value since and are down by 29.21% this year. Analysts and the elite hedge funds tracked by Insider Monkey were both losing confidence in the stock in advance of today’s tumble.

Whether elite hedge funds collectively like a stock or not is an important metric to consider, as these large investors show a great level of skill and expertise when it comes to picking stocks. Over the last few years equity hedge funds have trailed the market by a large margin, but that’s mostly due to their hedging and short positions, which perform poorly in a bull market. Their long positions performed far better, especially their small-cap picks, which have the potential to beat the market by 95 basis points per month on average, as our backtests showed. Our small-cap strategy involves imitating a portfolio of the 15 most popular small-cap picks among hedge funds and it has returned 102% since August 2012, beating the S&P 500 ETF (SPY) by over 53 percentage points (read more details here).

Shares of Castlight Health Inc (NYSE:CSLT) are being battered even worse than FireEye’s, losing 25.47% of their value today, despite the healthcare management services provider announcing an expanded collaboration with Anthem Inc (NYSE:ANTM) yesterday, which will include the two companies jointly promoting Castlight Health Inc (NYSE:CSLT)’s services to Anthem Inc (NYSE:ANTM)’s customers.

It was Castlight Health Inc (NYSE:CSLT)’s third quarter earnings report that appear to have done the firm’s stock in, despite the revenue of $19.50 million and earnings of a loss of $0.17 per share being in-line with estimates. The main culprit appears to be its fourth quarter guidance of $20.7 million-to-$21 million in revenue and a non-GAAP net loss per share of $0.16-to-$0.17, which were worse than estimates. Furthermore, the stock was downgraded by Leerink Swann to ‘Market Perform’ from ‘Outperform’ following the earnings and Anthem Inc (NYSE:ANTM) collaboration announcement, though Stifel Nicolaus reiterated a ‘Buy’ rating on the stock. 16 hedge funds in our database held 7.50% of Castlight’s shares on June 30

On the following page we’ll see why QUALCOMM, Inc. (NASDAQ:QCOM) and Axcelis Technologies Inc (NASDAQ:ACLS) aren’t getting any love today.

Shares of QUALCOMM, Inc. (NASDAQ:QCOM) have tumbled by 13.87% today, extending their year-to-date losses to over 30%. Activist investor Barry Rosenstein, who has urged the company to split its chip and patent-licensing businesses, and who in a recent investor letter expressed optimism regarding QUALCOMM, Inc. (NASDAQ:QCOM)’s position in the semiconductor industry, may be disappointed with the company’s fiscal fourth quarter 2015 results revealed yesterday. While Qualcomm’s fiscal fourth quarter results beat estimates on both the top and bottom lines, its guidance for the first quarter of fiscal year 2016 was weak, partially due to unresolved licensing agreements with two major customers in China. Nonetheless, Qualcomm has expressed that demand for its Snapdragon mobile chips has been stronger than expected, and it’s been reported that Samsung will likely return to using Snapdragon processors for its Galaxy smartphones with next year’s S7. As such, the selling today is likely overdone and the weak first quarter guidance only a temporary blip. With the involvement of an activist like Rosenstein pushing the envelope and with the stock trading at a forward P/E of just 10.03 and with a dividend yield of 3.70%, shares look pretty attractive at the moment.

Lastly, Axcelis Technologies Inc (NASDAQ:ACLS) is down by 24.18% today after the equipment provider for chipmakers released weak guidance of its own for the fourth quarter. The Beverly-based firm (that’s Massachusetts, not Hills), guided for $60 million-to-$65 million in earnings for the fourth quarter, while analysts had been projecting slightly more than $70 million. As with Qualcomm, Axcelis did top estimates for the third quarter on both the top and bottom lines, pulling in $79.32 million in revenue and income of $0.05 per share. The company believes it is well positioned to come out of the current weakness in the DRAM segment stronger-than-ever, and ready to capitalize on the next wave of growth in the industry when the times comes. Richard Mashaal‘s RIMA Senvest is a big believer in Axcelis Technologies Inc (NASDAQ:ACLS), holding slightly over 6.0 million shares of the stock on June 30.

Disclosure: None