Hot Stocks: Retail Rebound; WEN rallies on a potential sale; CPAP fixed high; VRCA, ASGN drop

The release of minutes from the Federal Reserve’s latest meeting gave Wall Street a boost late in the day, helping major averages post strong gains on Wednesday. The Nasdaq led the lead, climbing 1.5%.

A the rebound in the retail sector contributed to the gains. This came amid ongoing reports of a sale of Kohl’s (KSS), as well as revenues from Nordstrom and Best Buy (BBY). Macy’s (M), Dillard’s (DDS) and Deviation (GPS) were among the other top names that saw notable gains.

Wendy’s (NASDAQ:WEN) represented another notable winner, climbing on news that the company’s largest shareholder was looking to sell the company. Meanwhile, Pilgrim’s Pride (PPC) added to recent gains to set a new 52-week high.

On the other side of the ledger, Verrica Pharmaceuticals (VRCA) plunged nearly 60% on a major regulatory setback. Meanwhile, ASGN Inc. (ASGN) was dragged lower by negative analyst comment, falling to a fresh 52-week low.

Focus on the sector

Department stores and mall retailers have sparked buying interest as investors hunt for bargains among the beaten-up names in the cluster. The sector received a boost from Kohl’s (KSS), which rallied on additional reports of its intention to sell off.

According to Reuters, some bidders for the retailer are willing to pay up to $62 per share. KSS, which hit a 52-week low at $34.68 earlier this week, climbed almost 12% on the news, ending Wednesday’s trading at $40.48.

Retailers, which have been under pressure lately following weak results from Target and Walmart, also benefited from recent earnings reports from Nordstrom and Best Buy (BBY).

Elsewhere in the sector, Macy’s (M) climbed around 9%, while Dillard’s (DDS) posted a 12% lead. The deviation (GPS) has also increased by around 12%.

Outstanding Winner

Shares of Wendy’s (WEN) rallied after its top holder said it was considering a potential sale of the fast food chain. The stock rose 10% on the news.

Trian Partners, which owns a 19% stake in WEN, has announced its intention to explore a transaction with the company. In a filing, billionaire Nelson Peltz’ investment vehicle clarified that “such a potential transaction could include an acquisition, business combination (such as a merger, consolidation, takeover bid, or similar transaction ) or any other transaction that would result in the acquisition of control.”

WEN ended Wednesday’s session at $17.86, a $1.59 lead. The stock is bouncing off a 52-week low of $15.76 hit earlier this month.

Outstanding Loser

Verrica Pharmaceuticals (VRCA) has fallen off a cliff after failing to win US regulatory approval for a drug to treat a viral skin disease called molluscum contagiosum. The stock plunged 59% on the news.

The company revealed that the US Food and Drug Administration had denied its New Drug Application for its VP-102 product. The regulator cited shortcomings related to a manufacturing partner that manufactures Verrica’s bulk solution drug.

VRCA cratered $3.55 to end at $2.01. Shares also hit a 52-week intraday low of $1.88. The stock had hit a 52-week high of $14.78 in September.

Notable new peak

Pilgrim’s Pride (PPC) added to a steady rise it has seen over the past two and a half months, rising another 3% on Wednesday to hit a new 52-week high.

Many food and beverage stocks have held up well in the recent general downturn on Wall Street as investors turned to defensive stocks. This has included PPC, one of the nation’s largest chicken producers.

PPC advanced 99 cents to close at $32.21. During the session, the stock also hit a 52-week intraday high of $32.26.

Shares have risen steadily since the first half of March, coming off their 2022 closing low of $21.07. PPC is up 53% since that point.

Lately, progress has been helped by solid results published at the end of April.

New notable low

A bearish comment from an analyst prompted the sale of ASGN Inc. (ASGN) shares. The stock fell 6% during the session, hitting a new 52-week low.

Credit Suisse downgraded ASGN to Underperform from Neutral, saying the IT services and staffing firm faces an “uncertain” macro environment. The company also cut its price target to $90 from $110.

“While 2022 [estimates] seems achievable, 2023 is more ambitious – which could create multiple pressures – as we sit 5% below the street,” analyst Kevin McVeigh wrote.

Weighted down by the news, ASGN fell to a 52-week intraday low of $90.96. The shares recovered a little before the close but still posted a decline of $6.48. The stock traded at $94.

Wednesday’s slide extended recent losses, with ASGN falling 17% over the past month.

For more on the best and worst performing stocks of the day, head over to Seeking Alpha’s On The Move section.

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