Image source: ABM Industries.
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Thursday broke a positive streak for the stock market, as the Dow Jones Industrials fell back below the 18,000 level. Major market benchmarks were modestly lower, largely marking time in a holding pattern in advance of the Federal Open Market Committee's meeting next week
In general, market participants seem uncomfortable despite the fact that stocks are approaching all-time record levels, and a lack of clarity about the future direction of the economy gave investors an excuse to pause in the market's upward trajectory. Nevertheless, some stocks still managed to gain ground, and Envision Healthcare Holdings , Sarepta Therapeutics , and ABM Industries were among the best performers on the day.
Envision Healthcare climbed 8% after investors speculated about a potential takeover bid for the healthcare services provider. Reports surfaced that the company might be a potential target of AmSurg, which operates surgical centers. AmSurg has tried in the past to buy out one of Envision's competitors, but that company rejected the AmSurg proposal as providing insufficient value.
Details about what a possible combination would look like are far from clear, but from a business standpoint, combining the two companies' exposure to ambulance services, surgical centers, and other emergency-care needs could end up producing gains from synergies and other economies of scale. Envision saw some share-price weakness over the past year, so now would be a good time for a potential acquirer to jump in with a purchase bid.
Sarepta Therapeutics jumped 8% as investors celebrated the company's decision to tap the capital markets while its stock price is relatively high, in advance of a key FDA ruling. The company said it would make a secondary offering of roughly $37.5 million in stock, with pricing to be determined in the near future.
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Sarepta said it would use any net proceeds from the sale primarily for commercial and product development, along with manufacturing or business development activities. Many stocks fall when a secondary offering is announced, but with the drugmaker waiting to see whether the FDA will approve its muscular dystrophy treatment eteplirsen, investors apparently like the idea that Sarepta is locking in a source of future working capital while the time is right.
Finally, ABM Industries rose 7%. The provider of janitorial, facilities engineering, and electrical and lighting services released its fiscal second-quarter report late Wednesday afternoon, and ABM's results included revenue gains of 7%, and just a mild drop in adjusted earnings per share from year-ago levels.
CEO Scott Salmirs noted his pleasure at completing the first phase of ABM's 2020 Vision long-range plan, with cost savings ahead of schedule, and a new organizational structure in place to support further progress during the next several years. Increased guidance also gave shareholders confidence that the company is on track for success in the long run.