Shares of Bergen Brunswig Corp., the third-largest U.S. drug wholesaler, moved lower Thursday after the Orange-based company warned that its earnings will miss analysts' expectations because of Medicare funding changes.
The stock slumped 13% early in the session before rebounding to close at $15.06 a share, down 63 cents, or 3.8%, in trading of 5.1 million shares, more than five times the three-month daily average.
Bergen said it expects to earn 25 cents to 27 cents a share for the fiscal third quarter ended June 30 and $1.10 to $1.15 for the year, compared with 31 cents for the quarter and $1.24 for the year estimated by analysts.
"It's an organization that's doing very poorly, and we're not sure if we're really at the bottom," said Christopher McFadden, a First Union Capital Markets analyst, who downgraded Bergen to "hold" from "outperform."
Several other analysts also downgraded the company after the news. Analyst Kristi Thiese at Raymond James Financial Inc. downgraded it to "accumulate" from "buy" and Richard R. Vietor, a Merrill Lynch & Co. analyst, downgraded it to long-term "accumulate" from long-term "buy."