Hot Stocks: Health care stocks rise; MNTS soars; RAD sets low; VAPO withdraws guidance

A late-day surge allowed the major US equity averages to finish Thursday’s trading with mild gains, reversing losses seen earlier in the day. The higher finish ended a two-day slide that included consecutive days of more than 2% declines from the Nasdaq.

The health care sector helped buoy the market, as investors sought safe bets in a volatile market. Charles River Laboratories (CRL), Thermo Fisher Scientific (TMO), Pfizer (PFE) and Bristol-Myers Squibb (BMY) were among the names benefiting from the upswing.

Elsewhere in the market, Momentus (MNTS) represented one of the day’s standout gainers, climbing almost 50% as it pushes the development of its reusable space tug forward. Costco (COST) advanced as well, with strong monthly sales data sending the stock to a new 52-week high.

On the other side of the spectrum, Vapotherm (VAPO) plunged after the company withdrew its 2022 guidance. Rite Aid (NYSE:RAD) dropped as well, with a bearish analyst note driving the stock to a 52-week low.

Industry In Focus

Amid uncertain trading in the overall market, investors sought safety in defensive stocks. This sparked gains in the health care space on Thursday, with life sciences leading the charge.

Companies offering services to other health care companies, or providing supplies for labs and other facilities, performed particularly well. This included contract research firm Charles River Laboratories (CRL) which was one of the standouts in the sector. The stock climbed almost 6% on the session.

Thermo Fisher Scientific (TMO), a maker of products like centrifuges and incubators, also showed notable strength. Shares rose nearly 4%.

Several big-name pharma companies also experienced a lift. Pfizer (PFE) climbed more than 4%, while Bristol-Myers Squibb (BMY) rose almost 3% and set a fresh 52-week high.

Standout Gainer

Momentus (MNTS) soared almost 49% after the company revealed a series of agreements with SpaceX. The deals expand MNTS’s relationship with Elon Musk’s company, as the firm ramps up its Vigoride reusable space tug.

The commercial space company said it has inked multiple launch agreements with SpaceX, reserving slots on four upcoming SpaceX Transporter missions. The first of these missions is slated to take place in October.

MNTS currently plans to conduct a demonstration flight of its Vigoride product through an upcoming SpaceX mission this summer.

MNTS jumped $1.44 on Thursday to finish at $4.39. The advance helped the stock come further off a 52-week low of $1.85 set in mid-March. However, the stock remains well off a 52-week high of $14.69.

Standout Loser

A dismal forecast prompted an investor exodus out of Vapotherm (VAPO), which plunged about 39% on the day after the company warned that a decline in COVID hospitalizations has significantly decreased demand for its mask-free respiratory device.

As a result of this change in market conditions, the medical device manufacturer withdrew its guidance for 2022, signaling that investors should not rely on its previous forecasts for revenue, gross margin, operating expense and adjusted EBITDA.

Looking to the shorter term, VAPO predicted Q1 preliminary revenue of $20.5M-$21.5M. Analysts were looking for a figure just below $26M.

VAPO concluded trading at $7.89, crashing $5.02 on the session. The stock also reached an intraday 52-week low of $7.80.

With the retreat, shares dropped below a recent trading range to resume a downtrend that marked most of the period between mid-December and late February. Meanwhile, shares have come 75% off a 52-week high of $31.87 set in September.

Notable New High

Costco (COST) rallied almost 4%, bolstered by better-than-expected sales stats for March. With the advance, shares of the retailer reached a new 52-week high.

The company reported March comparable sales that rose 17.2% from last year. The figure easily topped expectations, which called for an increase of 11.2%.

Bolstered by the sales info, COST climbed $23.26 to close at $608.05. During the session, the stock also reached an intraday 52-week high of $612.27.

COST has been climbing steadily since late January, rising 27% over that time.

Notable New Low

A scathing analyst report prompted a massive sell-off in shares of Rite Aid (RAD). The stock plunged more than 17% to reach a new 52-week low.

Deutsche Bank downgraded its rating on the drug store chain, dropping it to a Sell from its previous opinion of a Hold. More than that, the firm slashed its price target on RAD, saying the stock could drop to $1. Previously, the firm had a $16 price target.

The pessimistic outlook came as Deutsche Bank worried about RAD’s ability to generate enough EBITDA to pay for its debt service costs and capital maintenance costs, saying it “needs to generate ~$400 million to $450 million in annual adjusted EBITDA to continue as an operating company. “

RAD plummeted to an intraday 52-week low of $6.11 during the early stages of the session. The stock recovered later in the day but still finished with a loss of $1.45. The stock closed at $6.99.

Longer-term, RAD has seen intermittent selling pressure since early last year, coming off a 52-week high of $23.02. The stock has now fallen almost 70% since that peak.

For more on the day’s biggest winners and losers, click over to Seeking Alpha’s On The Move section.

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