Why Hertz Global Holdings, Sibanye-Stillwater, and Achaogen Slumped Today

Tuesday saw a quieter session on Wall Street than Monday, with most major benchmarks modestly increasing to recover some of the ground lost in yesterday’s sell-off. Bullish investors are focusing on the likelihood of continued sharp gains when companies report their second-quarter earning in the next month, believing that those results could spur another push higher for stocks. Yet some companies had bad news that sent their shares lower. Hertz Global Holdings (NYSE: HTZ), Sibanye-Stillwater (NYSE: SBGL), and Achaogen (NASDAQ: AKAO) were among the worst performers on the day. Here’s why they did so poorly.

Hertz could see more pressure

Shares of Hertz Global Holdings dropped nearly 12% on a bad day for the rental car industry generally. Analysts at Morgan Stanley gave downbeat assessments of both Hertz and its primary rival, noting that they think it’ll be tough for the companies to gain enough pricing power to be able to outpace the depreciation expenses they have to take on their vehicle fleets. Competitive pressures from ride-sharing and other alternatives to rental cars are also weighing on Hertz’s prospects. Morgan Stanley did boost its price target on the stock by $2 to $15 per share, but it kept an underperform rating on Hertz. Moreover, the new target is still well below where Hertz closed on the day even after today’s decline.

Image source: Hertz Global Holdings.

Sibanye-Stillwater deals with safety issues

Sibanye-Stillwater stock fell 11% after the company suffered yet another fatal mining accident. The latest incident occurred at Sibanye’s Khomanani mine west of Johannesburg in South Africa, with a worker dying while night-shift cleaning operations were ongoing. Sibanye’s safety record has been horrible recently, and South Africa’s parliament has suggested that the company should be put under strict regulatory oversight pending a review of whether it should keep its operating license. With the company responsible for nearly half of all mining deaths since early this year, Sibanye needs to work quickly to restore its reputation to whatever extent it can.

Achaogen suffers a setback

Finally, shares of Achaogen plunged 20%. The biotech company announced that the U.S. Food and Drug Administration had given a split decision on a key candidate drug. Achaogen said that the FDA had approved its Zemdri antibiotic treatment for urinary tract infections, with CEO Blake Wise pointing to the decision as “an important step in our commitment to fighting [multidrug resistant] bacteria.” Yet the FDA rejected an indication for Zemdri in treating bloodstream infections, arguing that Achaogen’s evidence didn’t show enough effectiveness in treatment. Investors weren’t happy with the mixed performance, even though the company will go back to the FDA to see if it can address the agency’s concerns.

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