Market logic in a worrying world

Stock prices are determined by expectations of market participants. Rarely have stocks reacted so vehemently on the publication of results as during the current earnings’ season. On supposedly good results, a stock can easily jump 10, 20% or more and vice versa. In such an environment, it is hard to remain sanguine. When is a stock move fundamentally justified and when not? We’ll try to make sense of four big stock moves after the publication of results: Proximus, Syensqo, Argenx and UCB.

Proximus: fiber fever

The easiest, most straightforward case is Proximus. Its share price dropped 16% at the announcement that the dividend would be cut in half bringing it in line with free cash flow. Fair enough. Furthermore, some investors fear that the recovery of the Global business might take a long time. Management pointed to the weak long-term outlook in CPaaS, driven by ongoing pressure in SMS. But integration challenges were mentioned as well, meaning that the acquisition did not go as planned. Proximus took a 275 mln EUR goodwill impairment, finally admitting that it’s strategy was simply wrong and more importantly, that the value is much lower than what previous management claimed. For the umpteenth time, a big acquisition in a foreign country went awry. The other problem is that the free cash flow is only expected to improve from 2030, an eternity for investors. Some analysts also point to the competitive risk posed by Digi. The previous CEO bragged about the growth potential of the Global business. In reality it is a shrinking business, whereas the domestic business is stagnating. A bitter pill to swallow, so the sharp decrease of the share price seems perfectly rational. In that sense, the potentially positive message from the capital markets day (CMD) might have been lost in translation.

Syensqo: boulevard of broken promises

The first earnings call with analysts of the new CEO, Mike Radossich, ended with the share price sliding 30.6%. The next day, Syensqo lost another 11.3% and the day after, the stock opened again 5% lower, but closed up 1.3%. In other words, Syensqo lost nearly half of its value in just three days. Even in today’s volatile markets, this is quite unusual. Investors knew they did not have to expect much from 2025’ results, but they were enraged because management guided for yet another earnings’ drop in 2026. When Syensqo was “set free” from Solvay “to unleash its full potential”, analysts’ estimates were for EPS (earnings per share) of about 6.50 EUR in 2026 and 7.30 EUR in 2025. In reality, EPS dropped 26% to 5.28 EUR in 2024 (from 7.10 EUR in 2023) and went down another 29.5% to 3.72 EUR in 2025. “As earnings go, so go stock prices” has been proven once more. Far worse is the loss of confidence. The previous CEO collected an extraordinary bonus and abandoned ship in the middle of a full-blown storm. Serious questions on corporate governance can be asked. It would have been very easy to let the bonus only vest after five years and on the condition that certain financial metrics were met. Granted, macro-economic circumstances were and remain tough, but it seems quite logical that investors lost confidence in management. Only better results can restore this confidence.

Argenx: spoiled investors?

There is no lack of confidence in Argenx’ management, given its phenomenal track record. Yet, the stock dropped 8.2% on the publication of results. It drifted lower since and is now down about 14% year-to-date. This despite the fact that 15 out of 17 analysts issue a “buy” recommendation with an average target price of 851 EUR. Even a positive phase three readout (Vyvgart Ocular MG) and a 1.5% higher dollar did not help. It is very hard, if not impossible to logically explain this drop. It probably simply is yet another “random walk” with a certain downward drift as investors take into account the usual “weak first quarter” seasonality. Perhaps some investors are still nervous about the unexpected CEO-change that took place early 2026. However, the new CEO had been COO for quite some time and there is certainly continuity of leadership and strategy. From the analysts’ comments, it is clear that the investment case has not changed, but – if anything – has rather strengthened: “fuel further growth; continue to ramp up…”. Some investors may be nervous about the expected phase three readouts of clinical trials. In biotech, these are binary events often leading to big stock price moves. However, according to sector specialists, the probability of success is quite high for these trials. Timing may play a role, as the most important readouts only come in the third and fourth quarter. The latter will be important to provide Argenx with a new molecule that could be used in multiple indications. When Argenx could also show that it has promising other new molecules – expected in 2027 – then investors might start to see the company as a more broad-based, fully fledged biotech company. Expected earnings growth is very high (25% compounded 2026-29), whereas the price-earnings for 2027 is only 20.9x. The random drift may take the share price even lower, but for investors, this would be an occasion to seriously re-examine the case.

UCB: IQVIA musings

UCB also lost 7.9% on the publication of its annual results. Yet, UCB beat expectations and reiterated its bullish message of strong long-term growth. Perhaps the market was disappointed because donzakimig was “deprioritized”? That is jargon for a clinical trial that did not deliver what was hoped for. Perhaps the market had not expected the negative margin impact from a loss of exclusivity for Briviact, its epilepsy product? None of this seems to be the real worry. Judging from analysts’ comments, the real culprit was recent Iqvia data and a “bear message” from UCB’s competitor. IQVIA data provide insight into weekly prescriptions. These have indeed shown a slowing down for Bimzelx, which is by far UCB’s most important product and growth driver. Competition is fierce in the US, and the market is very complex, so data can from time to time be confusing. Because of this, some analysts lowered their sales estimates for this year. Bearish analysts start to put into question the Bimzelx growth story. Nevertheless, all this might be considered as “noise”, because the true story is that UCB has many years of strong growth ahead with no serious loss of exclusivity before 2033 (Bimzelx 2037). UCB is already working on its pipeline to renew sales beyond 2030. An important catalyst for UCB will be the publication of the “BE BOLD” study, where its product Bimzelx is compared with that of the most important competitor. These data are expected in the first half of 2026. Strong data will strengthen UCB’s competitive position and provide new drivers for growth.

 

This blog post does not contain any personal investment advice or investment recommendations as referred to in art. 2, 9° or 10° of the Act of October 25, 2016, on access to the activity of investment service provider. The information is of a general nature and does not take your personal situation into account. Investing involves risks, including loss of capital. Past performance is not an indicator of future results.