Why Express, Gogo, and Semtech Slumped Today
Thursday was a strong day for the stock market, and the major indexes climbed to all-time highs on the strength of the U.S. employment environment. The official May jobs report from the Labor Department isn't due out until Friday morning, but the release of private-sector data from ADP pointed to much stronger readings than had been expected. The news increases the likelihood that the Federal Reserve will boost interest rates later this month, but for now, market participants were focused on the positive implications of strong employment on the overall economy.
However, bad news from individual companies kept some stocks from participating in the rally. Express (NYSE: EXPR), Gogo (NASDAQ: GOGO), and Semtech (NASDAQ: SMTC) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Express plunged on retail weakness
Express dropped 19% after reporting its first-quarter results, which reflected the weakness in the overall retail sector. The clothing retailer said that revenue fell 7%, stemming from a 10% drop in total comparable sales, even after incorporating e-commerce sales that climbed 27% year over year. Increased promotional activity led to a substantial drop in margin, and higher buying and occupancy costs weighed on the bottom line. CEO David Kornberg asserted that trends started to look more positive toward the end of the quarter, and he describe the retailer as "increasingly optimistic" about its ability to boost performance in the remainder of the year. Nevertheless, the guidance that Express gave didn't live up to investors' hopes. It will have to do better if it wants to satisfy its suffering shareholders.
Image source: Express.
What goes up must Gogo down
Gogo shares fell 6%, more than giving up the 2% gains they recorded Wednesday after a positive review from a prominent analyst. The in-flight Wi-Fi provider has delivered some extremely impressive performances recently, as investors have come to recognize the powerful niche that Gogo has carved out with its airline customers in recent years. Increasingly, Gogo has forged useful partnerships with aircraft manufacturers to make sure that planes get outfitted with necessary equipment early in the manufacturing process, giving it an advantage in closing deals with aircraft purchasers later on. Even with today's decline, however, Gogo shares are up 11% since the beginning of April, and if it can keep executing well, the stock could gain even more altitude.
Semtech takes a breather
Finally, Semtech dropped 4%. The semiconductor specialist reported solid fiscal first-quarter results Wednesday afternoon, including a 14% rise in adjusted sales and a more than 50% jump in adjusted net income. CEO Mohan Maheswaran was extremely happy with the way the company performed, noting the fact that it delivered "record quarterly results from both our 100G ClearEdge platforms for cloud and hyper-scale data-center applications and our LoRa wireless platforms." Yet even though earnings were generally better than most of those following the stock had anticipated, Semtech's sales fell a bit short, and some saw its guidance as leaving something to be desired, compared to analysts' more aggressive projections.
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