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Why Callon Petroleum, Teva Pharmaceutical Industries, and PG&E Slumped Today

Dan Caplinger, The Motley Fool

Monday was a quiet day for the stock market, with major benchmarks staying close to where they began the session. Investors are expecting fireworks to begin this week, when a host of companies start releasing their earnings results, and the looming decision from the Federal Reserve on interest rates later this month should also have a big impact. Yet for some individual companies, share prices fell due to concerns affecting their respective businesses. Callon Petroleum (NYSE: CPE) , Teva Pharmaceutical Industries (NYSE: TEVA) , and PG&E (NYSE: PCG) were among the worst performers. Here's why they did so poorly.

Callon makes a buy

Shares of Callon Petroleum fell 16% after the oil company announced an agreement to merge with an industry peer. Callon and Carrizo Oil & Gas (NASDAQ: CRZO) will join forces, with Carrizo investors to receive 2.05 shares of Callon stock for every Carrizo share they own. The move will create a more diversified portfolio of energy assets that covers both the Permian Basin and Eagle Ford shale areas, and Callon CEO Joe Gatto believes that the combined company will "benefit from an expanded infrastructure footprint and critical mass for our production market and supply chain functions." Yet investors seem to think that Callon overpaid for Carrizo , especially given the balance sheet concerns that both companies have had in a tough environment for the oil and gas industry.

Callon Petroleum logo in blue and orange.

Image source: Callon Petroleum.

Teva feels the pain

Teva Pharmaceutical Industries saw its stock drop nearly 8% following a downgrade from a prominent Wall Street analyst firm. Morgan Stanley downgraded the drugmaker from equal weight to underweight, with its primary concern being current litigation involving makers of opioid drugs. Teva has already settled one dispute regarding opioids, and the analyst believes that the company's generic opioids could open it up to further litigation down the road. Moreover, with greater levels of debt on its balance sheet, Teva could be more vulnerable to a potentially catastrophic verdict than some of its peers in the industry.

Will creditors challenge PG&E?

Finally, shares of PG&E finished lower by almost 9%. The California utility has faced challenges for years, as many have blamed its power lines for devastating wildfires across the state. Despite a $21 billion wildfire fund that the California state government just created, some of those following PG&E now believe that its creditors might seek to propose an alternative reorganization plan in bankruptcy to the one the utility has already put forward. Shareholders' hopes have been high that PG&E might emerge from bankruptcy with significant prospects for a full recovery, but even the threat of a potential roadblock was enough to make them nervous today.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .