Why These 5 Stocks Are Deep in the Red on Friday

Markets opened lower on Friday following disappointing GDP growth stats from the Commerce Department and weak earnings from the energy sector.

Among the major losers today are Seres Therapeutics Inc (NASDAQ:MCRB), Stericycle Inc (NASDAQ:SRCL), GoPro Inc (NASDAQ:GPRO), Western Digital Corp (NASDAQ:WDC) and Expedia Inc (NASDAQ:EXPE). Let’s take a look at the developments that pushed these stocks lower and see how hedge funds tracked by Insider Monkey are positioned towards these companies.

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Seres Therapeutics’ Drug Trial Fails to Meet Endpoint

Seres Therapeutics Inc (NASDAQ:MCRB)’s stock has plunged by around 74% after the company said its interim Phase 2 trial results for its colon infection treatment drug, SER-109, failed to achieve primary endpoint.  The company said that it continues to gather and analyze the results from the study, and plans to make adjustments to the drug after consultation with the FDA. Seres Therapeutics’ CEO Roger Pomerantz said in a statement that the results from the study were “unexpected”, and the company plans to do a full review and compare them to the data from a prior investigator sponsored Phase 1b. Just nine funds from our database were long Seres Therapeutics Inc (NASDAQ:MCRB) at the end of the first quarter.

Stericycle Misses Q2 Revenue Estimates, Lowers Guidance

Stericycle Inc (NASDAQ:SRCL)’s stock has lost some 17% so far today after the company missed revenue estimates for the second quarter. The Illinois-based company engaged in collection and disposal of hazardous waste material earned $1.18 per share, in-line with the analyst estimates. but revenue of $891.6 was lower than the consensus estimate of $912.79 million. In addition, Stericycle lowered its full-year EPS guidance to the range of $4.68 to $4.75 from the previous forecast of $4.90 to $5.05. Barry Rosenstein’s JANA Partners owns more than 2.42 million shares of Stericycle Inc (NASDAQ:SRCL) as of the end of the first quarter. Overall, 24 hedge funds tracked by us were bullish on the company.

On the next page, we will discuss why shares of GoPro, Western Digital and Expedia are losing ground today.

GoPro’s Struggling Revenue Growth

GoPro Inc (NASDAQ:GPRO)’s stock is down by more than 2% so far today, even though the company topped analysts’ second-quarter estimates. Investors remain skeptical regarding the action camera maker due to its sinking sales. GoPro‘s revenue in the quarter came in at $220.7 million, above analyst forecasts of $194 million, but sharply down from the $420 million figure reported for the same quarter of 2015. GoPro’s adjusted loss amounted to $0.52 per share, better than the estimated loss of $0.59 per share. CEO Nick Woodman said in a statement that GoPro is “well-positioned” for the second half of 2016, as it now has a simple product line, clean retail channel, and indications of a strong demand. For the full year, the company sees its revenue between $1.35 billion and $1.5 billion, compared to the $1.34 billion estimated by analysts. A total of 16 funds from our database owned $96.26 million worth of GoPro Inc (NASDAQ:GPRO) shares on March 31, which accounted for 5.90% of the stock’s float.

Western Digital Swings to a Loss

Western Digital Corp (NASDAQ:WDC)‘s shares have declined by more than 12% on the back of the company’s fourth quarter of fiscal year 2016 results, which showed that the company swung to a heavy loss as it transitions from its traditional disk-drive business to flash-storage technology. Western Digital posted a loss of $351 million, or $1.34 per share, down from a profit of $220 million, or $0.94 per share, a year earlier. Non-GAAP earnings came in at $0.79 per share for the quarter, better than the expected $0.71. Revenue for the quarter amounted to $3.50 billion, also topping the consensus estimate of $3.45 billion. For the full 2016 fiscal year, revenue came in at $13.0 billion, while net income totaled $257 million, down from the previous fiscal year’s revenue of $14.6 billion and net income of $1.5 billion.

For the first quarter of fiscal year 2017, Western Digital expects revenue in the range of $4.4 billion-to-$4.5 billion, above the Street’s average estimate of $4.28 billion. Western Digital’s CEO Steve Milligan said in a statement that fiscal year 2016 was a “transformative” one, and that the company is now well-positioned for global opportunities in the data center, client device, and client solution end-markets. Western Digital recently acquired SanDisk to tackle slowing growth and rapid technology changes in the data storage industry. A total of 42 hedge funds in our database held shares of Western Digital Corp (NASDAQ:WDC) at the end of the first quarter, up from 37 funds a quarter earlier.

Expedia Misses Revenue Estimates

Shares of Expedia Inc (NASDAQ:EXPE) are down by 1.72% today after the company posted weaker than expected second quarter revenue, mainly due to costlier promotions, discounts for new hotel listings, and the rising threat of terrorist attacks in Europe. The company earned $0.83 per share, above the estimates of $0.78. Revenue for the quarter came in at $2.20 billion, below the forecasts of $2.25 billion. The company expects revenue per room night to decline through the end of 2016. Among the hedge funds tracked by Insider Monkey, 65 funds were long Expedia Inc (NASDAQ:EXPE) on March 31, down from 73 funds a quarter earlier.

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