Why Alphabet, Cerner, and Biogen Slumped Today

Market trading boards are seen at the Australian Securities Exchange in Sydney, Friday, February 9, 2018. ( AAP Image/Ben Rushton) NO ARCHIVING

Major benchmarks climbed slightly on Tuesday as investors eyed the start of corporate earnings season.

But several individual stocks lagged the broader market. Read on to see why Cerner (NASDAQ: CERN), Biogen (NASDAQ: BIIB), and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) slumped today.

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A word of caution on Cerner

Shares of Cerner fell 4.6% after Evercore ISI analyst Ross Muken downgraded the health IT solutions and services company from "in line" to underperform. The firm also reduced its per-share price target on Cerner stock by $2 to $55, for a 13.7% discount from yesterday's close.

To justify his bearishness, Muken argued that Cerner's growth could be muted by the rise of cloud-based and software-as-a-service business models. He also warned that larger tech companies and "emerging venture backed vendors in population health and other analytical adjacencies" could present a "potential incremental competitive threat."

As high-tech competitors work to chip away at Cerner's core business, long-term shareholders would do well to watch these trends closely.

Biogen gets a thumbs-down


Biogen stock fell 2.6% in the wake of Baird analyst Brian Skorney downgrading it to neutral from outperform.

The timing of the call is no coincidence. Late last week Biogen shares soared in response to positive top-line results from a phase 2 clinical study of BAN2401, an experimental Alzheimer's disease drug. Today, however, Skorney noted that the data surrounding those results is "pretty ambiguous," and doesn't necessarily support Biogen stock's pronounced pop.

Skorney simultaneously maintained his $323-per-share price target on the biotech leader — a modest discount from yesterday's closing price of $354 per share — stating he's content to watch its progress from the sidelines for now.

Another enormous fine for Alphabet?

Finally, Class A shares of Google parent Alphabet edged just into negative territory at the end of the day, giving up earlier gains following a Wall Street Journal report (subscription required) that the internet search giant will likely face a multibillion-euro antitrust fine from the European Commission (EC) for abusing the market leadership of its Android mobile operating system.

According to "people familiar with the matter," the EC is expected to find that Alphabet "thwarted potential competitors to safeguard its mobile-advertising business," the strength of which Google has singled out in recent quarters as a primary driver of its top-line growth. The EC will also order changes to Alphabet's Android business practices to stem the alleged abuse.

If that weren't enough, WSJ says this fine could dwarf the $2.7 billion penalty that Alphabet absorbed in 2017 — then subsequently appealed — for allegedly favoring its own comparison-shopping service over those of competitors in Google Search results.

With net income of more than $9 billion last quarter alone, that's not to say Alphabet can't afford another fine, and it will almost certainly contest the EC's findings if they're unfavorable. Still, it's hardly surprising to see shares pulling back in response today.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Biogen. The Motley Fool recommends Cerner. The Motley Fool has a disclosure policy.

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