Why General Mills, CalAmp, and Evolent Health Slumped Today

Wednesday was a bad day on Wall Street, as stock market indexes posted big losses following the latest negative news on trade. Investors had hoped that the U.S. and China would be able to reach a resolution on all the trade problems that have gradually worsened over the past several months, but today's comments suggesting that the Chinese government could limit access to materials essential for manufacturing mobile devices and batteries only ratcheted up tensions. Certain individual companies also had specific issues that sent their shares downward even more sharply. General Mills (NYSE: GIS), CalAmp (NASDAQ: CAMP), and Evolent Health (NYSE: EVH) were among the worst performers. Here's why they did so poorly.

General Mills takes a Goldman hit...

Shares of General Mills fell nearly 6% after analysts at Goldman Sachs downgraded the food giant. Goldman cut its rating on General Mills from neutral to sell and reduced its price target by $1 to $41 per share. The analysts admitted that General Mills has been able to do a good job of overcoming some of the difficulties facing the food industry, and that's helped to boost the stock's price dramatically in recent months. Yet with the share price now approaching levels not seen in several years, Goldman thinks that General Mills could face risks that outweigh any further reward from investing in the stock. It's possible that the food company will be able to keep avoiding the problems plaguing its rivals, but shareholders seemed happier to count their profits than hold onto their shares today.

...while CalAmp gets similar treatment

CalAmp also was the recipient of an unfavorable review from Goldman Sachs, and its stock dropped 10% in response. Analysts slashed their rating on the machine-to-machine communications specialist from neutral to sell, and a corresponding $2 cut to their price target took the figure down to $11 per share. CalAmp has made a lot of progress moving toward a business model that's more reliant on recurring revenue, and after going through a tough period, investors had appeared ready to accept that the strategic move was starting to pay off. Yet Goldman sounds concerned that cyclical headwinds could hurt CalAmp's hardware business at exactly the wrong time, and investors don't seem prepared to deal with that added pressure on the company.

Evolent makes a deal that investors don't like

Finally, shares of Evolent Health plunged 29.5%. The med-tech specialist said that it would spend $70 million to expand its partnership with Passport Health Plan, which serves the Medicaid market for Kentucky. The deal will give Evolent a 70% stake in the partnership, with current stakeholders including the University of Louisville and several other community groups retaining an interest as well. There's quite a bit of uncertainty regarding the possible future path of healthcare reform and especially its potential impact on Medicaid programs across the nation. In that light, investors seem to disagree with Evolent's assertions that the strategic move will lead to long-term growth and would prefer a greater focus on achieving consistent profitability sooner rather than later.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends CalAmp. The Motley Fool has a disclosure policy.