Churchill Downs, Apellis shares surge in June; Papa John’s plunges

A bar chart showing the performance of Louisville area stocks in June 2019. Churchill Downs' shares surged in June, while Papa John's International's fell.

Illustration by Boris Ladwig

Shares of Apellis Pharmaceuticals and Churchill Downs surged in June, a month that saw most stocks of local importance beat the S&P 500.

Thanks to a strong rebound in June, about half the 14 local stocks tracked by Insider Louisville, including Yum Brands, Churchill Downs and Humana, erased their declines from a terrible May.

Only two of 14 local stocks tracked by Insider suffered significant losses in June: Papa John’s and Sypris Solutions. Both already had suffered big selloffs in May.

A portrait of Brett Corbin

Brett Corbin

“The markets have been choppy lately, thanks to the simmering trade war and tensions with Iran,” said Brett Corbin, a financial adviser with The Corbin Financial Group of Raymond James.

“The apparent trade war truce on Friday should calm fears and provide some stability,” he said.

Shares of Apellis rose steadily in the first half of the month, trading for $21.17 on June 17, up 5.4% compared to May 31, but then spiked 13.5% over the next four days, closing at $24.03 on June 20.

The company had announced on June 15 that a Phase 2 study for its drug, APL-2, to treat two autoimmune diseases showed improvement in patients and, for at least one of the conditions, provided a “clear path to move forward with a Phase 3 trial,” which the company expects to begin early next year.

Apellis’ stock price stayed fairly constant for almost the remainder of the month but rose another 3.6% on Friday in heavy trading. More than 1.9 million shares changed hands, about four times the average daily volume.

The day before that spike, the Crestwood-based company had said that it had completed enrollment for its Phase 3 trials assessing the safety and efficacy of APL-2 in patients with paroxysmal nocturnal hemoglobinuria, a disorder that leads to the premature death and impaired production of blood cells. The company said it expects to release data on the trial in December.

Churchill Downs’ shares rose nearly 17% in June, thanks to an increase in the early part of the month that was fueled by gambling friendly legislation.

Shares rose more than 11% between June 4 and June 10 after the company made a presentation to investors and after Illinois legalized sports gambling and approved six new casinos as part of a bill that, according to ProPublica, could turn the state into “the gambling capital of the Midwest.”

Industry analysts said that the legislation would be a boon for Churchill Downs, in part because of its 62% stake in Rivers Casinos near Chicago.

Two local bank stocks, Republic Bancorp and Stock Yards Bancorp, surged 8.5% in June, buoyed by the Federal Reserve’s signaling an end to rate hikes.

Some analysts have even speculated that the Fed may cut rates at the end of this month, which would lower interest rates and therefore consumers’ cost to borrow money for cars, homes and other purchases. More borrowing would increase revenue for banks. At the same time, lower interest rates would allow those banks to lower the amount of interest they’re paying consumers for their deposits.

June’s low performers

Only three local companies experienced share price declines in June. While the tobacco products company Turning Point Brands saw a dip 0.4% in June, shares are is still up nearly 15% over the last two months.

Papa John's new logo. While Churchill Downs' shares surged in June, Papa's fell.Meanwhile, shares of Papa John’s fell nearly 8% in June and are down nearly 13% over the last two months.

The pizza chain’s stock price actually had risen nearly 5% in the first half of June, but began to decline after the company said its board had dismissed its independent registered public accounting firm after it said that Papa John’s did “not maintain effective internal control over financial reporting.”

Some industry observers said the move did not reflect well on the company.

Only three days later, investors did not react well to Papa’s plan to spend another $80 million on domestic franchises and to bolster its brand. The pizza chain said it would make new marketing dollars available to “activate its new ambassador, Shaquille O’Neal” and help franchisees through lower royalties.

Analysts said the move indicated that sales improvements were not happening as quickly as the company’s leaders had hoped.

For the second month in a row, Sypris Solutions is the worst-performing stock among the 14 tracked by Insider. The local manufacturer’s shares fell nearly 14% in May, following a disappointing earnings report, and dropped another 9% in June.

Shares had held fairly steady in the early part of the month but were dragged down by the company announcing that, once again, it had received notification from the Nasdaq that it was in danger of being removed from the index because of its low share price.

Shares fell 6% Friday in heavy trading — three times the daily average — after the company said that data entry processing errors caused the company to understate its first-quarter cost of sales by $790,000.

The company said that the cost of sales amount previously had been expected to be recorded in the second quarter. While Sypris Solutions will have to restate its previously issued unaudited consolidated interim financial statements, the company said it did not expect any impact on its expected return to profitability.

Corbin, the financial adviser, told Insider that while he believes the U.S. remains one of the best places to be invested in the long term, some economic worries remain for the near term.

“There are still some signs of slowing, and Treasury yields remain low, which signals some investors looking for safety,” he said.