GoPro (GPRO), Ralph Lauren (RL) and 3 Other Companies Join the Growing List of Stocks Battered by Weak Earnings

U.S stocks are slightly higher in early afternoon trading following some choppy morning trading. Oil prices went south again after a strong rally yesterday, while the U.S dollar has continued its slide against major currencies, both of which are weighing on the markets. In this article we’ll take a look at some of the stocks that are deep in the red following weak earnings reports today and see whether elite money managers anticipated the weak performance. Those companies are GoPro Inc (NASDAQ:GPRO), Boston Scientific Corporation (NYSE:BSX), Kohl’s Corporation (NYSE:KSS), Ralph Lauren Corp (NYSE:RL), and Pacific Biosciences of California (NASDAQ:PACB).

We determine hedge fund sentiment by analyzing the equity portfolios of some of the best-performing hedge funds and institutional investors. Through extensive research, we have determined that the due diligence that these investors employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also showed that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).

Investors were taken by surprise by GoPro Inc (NASDAQ:GPRO)‘s latest quarterly report, as the wearable camera maker reported a loss of $34.5 million for the fourth quarter. When adjusted for one-time expenses, the loss stands at $0.08 per share, while analysts were looking for earnings of $0.01 per share. Revenue tumbled by 30% to $436.6 million, though this was slightly above analysts’ expectations of $434.9 million. GoPro CEO Nicholas Woodman said the company plans to counteract the recent slump with innovative software that will enhance the customer experience. For the current quarter, GoPro expects sales to range between $160 million and $180 million, significantly lower than analysts’ estimates of $298 million. Shares are currently trading down by 10% from yesterday’s closing price.

GoPro Inc (NASDAQ:GPRO) received a small vote of confidence from hedge fund managers in the third quarter, as the number of long positions among the funds followed by Insider Monkey increased to 25 by the end of the quarter, from 21 at the end of June. Edward Gilhuly and Scott Stuart‘s Sageview Capital holds the largest stake in GoPro among the funds in our database, having reported ownership of 1.7 million shares in its latest 13F filing.

Medical device maker Boston Scientific Corporation (NYSE:BSX) has reported another quarterly loss, sending the stock down by as much as 6% during the first hours of trading. For the fourth quarter, the company posted revenue of $1.98 billion, just shy of analysts’ target of $1.99 billion, while it posted a loss of $0.11 per share. When adjusted for one-time gains and costs however, the income stands at a profit of $0.26 per share, above the Wall Street consensus of $0.25 per share. It wasn’t all gloom, as Boston Scientific registered a significant 4.8% increase in sales, a sign that management’s diversification efforts are finally paying off. Last year, the company acquired the men’s health and prostate businesses of American Medical Systems for $1.6 billion and has launched several new products, which helped it narrow its quarterly loss to $142 million, from $299 million a year earlier.

Approximately 7% of Boston Scientific Corporation (NYSE:BSX)’s common stock was held by 37 elite hedge funds in our database at the end of September, up from 35 at the end of June. Samuel Isaly is betting big on Boston Scientific, having invested with his fund Orbimed Advisors holding a little over 24 million shares, as reported in its latest quarterly filing.

A disappointing holiday season has forced Kohl’s Corporation (NYSE:KSS) to revise its 2015 full year guidance, sending the stock into a tailspin this morning. The department store chain said same-store sales rose by just 0.4% during the fourth quarter, pointing to a slow start to the holiday season in November and sluggish sales in January. Analysts, on the other hand, were hoping for a 1.2% increase in sales. Kohl’s said it now expects full year adjusted earnings to be in the range of $3.40 to $3.45 per share, down from previous projections of $4.40-to-$4.60 per share. Shares are currently trading down by 15% from yesterday’s close.

Hedge funds tended to shy away from Kohl’s Corporation (NYSE:KSS) during the third quarter, with the number of funds invested in the company at the end of September decreasing by four to 29, or 4% of the firms tracked by Insider Monkey. David Harding‘s Winton Capital Management, on the other hand, thought the stock was poised for growth and boosted his stake by 66% to 1.57 million shares during the quarter.

The next page has the latest earnings results for Ralph Lauren and Pacific Biosciences of California.

Although Ralph Lauren Corp (NYSE:RL) managed to beat earnings estimates for its third quarter of fiscal year 2016, investors were not pleased by the 4.3% decline in sales and the revised guidance for the full fiscal year. As a result, shares fell off a cliff, down by as much as 18% during the first hours of trading. In the fiscal third quarter, the clothing company registered a profit of $131 million or $2.27 per share when adjusted for one-time costs, beating analysts’ estimates of $2.11 per share. Revenue came in at $1.95 billion, as same-store sales tumbled by 7% during the quarter. Having previously projected flat revenue for fiscal year 2016, the company now believes a drop of 3% is more likely.

During the third quarter of 2015, hedge fund sentiment towards Ralph Lauren Corp (NYSE:RL) improved a bit, as the number of long positions increased to 33 from 28 quarter-over-quarter. Billionaire Ken Griffin saw great upside potential, having increased his investment in the company by 123% over the quarter, to amass 1.27 million shares of Ralph Lauren.

Pacific Biosciences of California (NASDAQ:PACB)‘s stock has also been hit by poor quarterly results, as investors pushed the stock lower by more than 20% during the first hours of trading today. The company issued its fourth quarter results yesterday after the closing bell, posting a loss of $0.02 per share, exactly what analysts were predicting. Revenue came in at $36.3 million, failing to meet the consensus of $38.4 million. The company’s full year loss narrowed to $31.7 million or $0.42 a share, on the back of $92.8 million in revenue. The stock had been in a slight downtrend this year, having declined by approximately 5% before the release of the earnings report.

Although only 11 funds of those we follow reported a stake in Pacific Biosciences of California (NASDAQ:PACB) as of the end of September, together they held 28% of the company’s common stock. Mitchell Blutt is betting big on this stock, with his firm Consonance Capital Management reporting ownership of 6.25 million shares of Pacific Biosciences of California as of September 30, up by 16% over the quarter.

Disclosure: None