What Happened?

A number of stocks jumped in the afternoon session after the market experienced a sharp sector rotation, as investors fled growth-oriented technology stocks and piled into value-oriented names amid growing valuation concerns. 

This divergence was stark: the tech-heavy Nasdaq struggled, losing 0.2%, while the Dow rallied. This shift away from tech was triggered by a series of negative catalysts in the AI sector. AI cloud provider CoreWeave slid on disappointing guidance, while chip darling Nvidia pulled back after SoftBank sold its stake. This "hurt the AI trade," dragging down related names like Micron and Oracle. As capital left tech, it sought safety in "higher quality" defensive names. Health care giants like Merck, Amgen, and Johnson & Johnson saw significant buying, boosting the Dow.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Generic Pharmaceuticals company Viatris (NASDAQ: VTRS) jumped 9%. Is now the time to buy Viatris? Access our full analysis report here, it’s free for active Edge members.
• Health Insurance Providers company Oscar Health (NYSE: OSCR) jumped 3%. Is now the time to buy Oscar Health? Access our full analysis report here, it’s free for active Edge members.
• Therapeutics company BioMarin Pharmaceutical (NASDAQ: BMRN) jumped 3.8%. Is now the time to buy BioMarin Pharmaceutical? Access our full analysis report here, it’s free for active Edge members.
• Medical Devices & Supplies - Imaging, Diagnostics company QuidelOrtho (NASDAQ: QDEL) jumped 10%. Is now the time to buy QuidelOrtho? Access our full analysis report here, it’s free for active Edge members.
• Medical Devices & Supplies - Specialty company Bausch + Lomb (NYSE: BLCO) jumped 3.3%. Is now the time to buy Bausch + Lomb? Access our full analysis report here, it’s free for active Edge members.

Zooming In On QuidelOrtho (QDEL)

QuidelOrtho’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock dropped 12.8% on the news that it reported disappointing third-quarter financial results and reduced its full-year earnings forecast. The healthcare diagnostics company announced that its revenue for the quarter was $699.9 million, a 3.7% decrease compared to the same period last year. While this figure and the company's adjusted earnings per share of $0.80 both beat Wall Street's expectations, investors were more concerned by a steep GAAP net loss. This loss included a substantial non-cash goodwill impairment charge, which is a writedown on the value of a company's assets. Adding to the negative sentiment, QuidelOrtho lowered its adjusted earnings per share guidance for the full year, a 10.6% decrease at the midpoint.

QuidelOrtho is down 51.3% since the beginning of the year, and at $21.95 per share, it is trading 53.9% below its 52-week high of $47.61 from January 2025. Investors who bought $1,000 worth of QuidelOrtho’s shares 5 years ago would now be looking at an investment worth $102.37.

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