A roundup of some of the North American equities making moves in both directions
On the rise
Telus Corp. (T-T) finished higher on Monday after taking the first step toward an initial public offering of its international unit.
The Vancouver-based telecom announced on Friday that its subsidiary, Telus International, has filed a registration statement with the U.S. Securities and Exchange Commission for an IPO. The company plans to file documents with Canadian securities regulators on Jan. 11.
Telus International – which sells information technology, call-centre and other services to businesses – is planning to go public on the New York Stock Exchange and the Toronto Stock Exchange. The number of shares and the price range for the offering are still to be determined.
J.P. Morgan Securities LLC and Morgan Stanley & Co. have been chosen as lead underwriters for the IPO. Barclays, BofA Securities and CIBC Capital Markets will also act as underwriters.
Telus International started 15 years ago as a call-centre operator for Telus and a handful of U.S. telecom and technology companies. Since then, it has expanded into other areas such as developing and supporting mobile applications, as well as building virtual assistants such as chatbots and moderating content online.
- Alexandra Posadzki
Office Depot owner ODP Corp. (ODP-Q) soared after retailer Staples said it made an offer to buy it for US$2.1-billion in cash, nearly five years after its second takeover effort was rejected.
The U.S. Federal Trade Commission blocked Staples’ US$6.3-billion offer in 2016, saying a merger between the two could reduce competition for nationwide contracts for office supplies.
The two companies agreed to merge in 1996, but the deal was put to rest as a government lawsuit argued the move would have meant higher prices for pens, paper and other office supplies.
Staples was a public company when it attempted the acquisition. It went private in 2017.
Staples said it is prepared to take “all necessary measures” to divest ODP’s B2B Business to a FTC approved and qualified buyer.
USR Parent Inc, or Staples, said it would offer US$40 per for each ODP share, a premium of 8.2 per cent to Friday’s close.
Eli Lilly and Co. (LLY-N) jumped after it said on Monday a trial of its experimental Alzheimer’s drug donanemab showed it slowed by about a third the rate of decline in a combined measure of cognition and function in early-stage victims of the disease.
The drug is an antibody designed to remove clumps of the Alzheimer’s-related protein beta amyloid from the brain.
Lilly said the mid-stage trial of 272 patients met its main goal of showing a statistically significant change in clinical decline over 18 months.
Donanemab targets a type of beta amyloid known as N3pG which Lilly believes can be rapidly cleared, enabling short-term, but durable, treatment.
Patients in the study stopped receiving donanemab and were switched to placebo once their brain plaques reached levels seen in healthy people - a process that took just a few months for some patients.
Gilead Sciences Inc. (GILD-Q) gained after it raised its full-year profit forecast on Monday, as a recent resurgence in COVID-19 cases boosted demand for its COVID-19 treatment, remdesivir.
The level of new COVID-19 cases in the United States is starting to rise again, amidst the slow rollout of vaccine. Experts say the country should expect another surge in mid-January due to holiday gatherings.
The antiviral, currently authorized to treat COVID-19 patients across the world, was one of the drugs used to treat U.S. President Donald Trump’s coronavirus infection.
Gilead said it was raising its total product sales forecast to the range of US$24.30-billion to US$24.35-billion, reflecting increased sales of remdesivir.
The company also said there was a higher uptake of its HIV drug, Biktarvy.
The U.S. drugmaker expects adjusted earnings for 2020 in the range of US$6.98-US$7.08 per share, compared with the earlier forecast of US$6.25- US$6.60 per share.
China’s electric vehicle (EV) maker Nio Inc. (NIO-N), which competes with conventional premium automakers including Daimler AG and BMW, rose after its chief executive said it may make mass market products under another marque.
“As EV technologies advance and battery cost lowers, it is possible that we may enter the massive market, but definitely not with Nio brand,” William Li, chief executive of Nio told reporters on Sunday. He gave no more detail.
Nio did not immediately respond to a request for further details. The company is currently delivering three sports utility vehicle (SUV) models built at its Hefei plant, which are mostly priced above 300,000 yuan (US$46,200).
Nio, which also competes with Tesla Inc in China, on Saturday launched its first sedan model as it eyes a greater share of the world’s largest car market.
Nio delivered 43,728 vehicles last year and has a market capitalization of over US$92-billion, surpassing conventional automakers Daimler and General Motors Co.
The stock was also fuelled by several target prices increases from Wall Street firms on Monday.
JP Morgan raises target for the stock to US$75 from US$50, seeing it as a “fast-growth technology/EV stock than a carmaker”
GameStop Corp. (GME-N) signed an agreement with investor Ryan Cohen’s RC Ventures LLC on Monday, appointing the Chewy.com founder and two other e-commerce veterans to its board as the ailing videogame retailer doubles down on digital sales.
Shares of GameStop, in which RC Ventures holds a 13-per-cent stake, were up on Monday.
RC Ventures in November urged the world’s largest videogame retailer, hit by growing digital downloads of console games and intense competition, to conduct a strategic review of its business and focus on digital sales.
Alan Attal and Jim Grube will be the other directors on GameStop’s board, the company said.
Chipotle Mexican Grill Inc. (CMG-N) was up after it said on Monday it would hire 15,000 workers in the United States, as the fast-casual burrito chain benefits from strong demand during the COVID-19 pandemic.
The move comes about five months after Chipotle said it planned to add 10,000 more people to its more than 85,000-strong workforce. It now employs about 94,000 people, most of them in the United States.
Fast-food chains - mainly pizza and Mexican restaurants - have seen sales remain strong during the pandemic as customers crave comfort food and order in more. Chipotle had posted a 14% jump in revenue in its latest reported quarter.
Chipotle in October had said it would open about 200 restaurants. The company had over 2,700 restaurants, as of September.
Major pizza chains, including Papa John’s International Inc and Domino’s Pizza Inc, and other big names such as McDonald’s Corp have hired thousands of people in recent months to meet heightened demand even as family-owned restaurants have had to shut shop.
On the decline
Lululemon Athletica Inc. (LULU-Q) was lower on Monday after saying revenue and earnings for its fourth quarter are forecast to come in at the top end of its earlier expectations.
The athletic clothing retailer says it now expects its percentage growth rate for net revenue compared with a year ago to be at the high end of its earlier expectations for mid-to-high teens.
Lululemon also says it expects its growth rate for adjusted diluted earnings per share to now be at the high end of its earlier expectations for a result in the mid-single digits.
The fourth quarter of Lululemon’s 2020 financial year ends on Jan. 31.
The company issued the updated guidance ahead of meetings with analysts and investors at an investment conference this week.
Lululemon chief executive Calvin McDonald says the company remains confident about its opportunities in 2021 and committed to its growth plan.
Maple Leaf Foods Inc. (MFI-T) was lower after saying it plans to spend US$100-million to increase tempeh production capacity with the acquisition of a food processing plant in Indianapolis.
The company says the purchase of the plant is expected to close in early April followed by the installation of tempeh production equipment with initial capacity of about 4.5 million kilograms.
Maple Leaf Foods announced plans in 2019 to build a new plant protein facility in Shelbyville, Ind., but it says development of that project has been delayed due to a number of factors including the pandemic.
It says by buying an existing facility in Indianapolis, the company will be able to meet the growing demand for tempeh while allowing more time to develop its longer-term vision for Shelbyville.
Tempeh is a plant-based protein made from soybeans. Maple Leaf says initial production at the plant is targeted to begin in the first half of 2022 and it is expected to employ 115 people when fully operational.
The company says if demand for tempeh continues as expected the plant offers the flexibility to proceed with a second phase that could include doubling capacity.
Shares of Twitter Inc. (TWTR-N) slumped on Monday after it permanently suspended the account of U.S. President Donald Trump.
The slide came as some Republicans hit out over the weekend at the platform for gagging one of its most watched participants, with traders also pointing to signs that the affair was further fueling calls for greater regulation of Big Tech.
Trump’s account had more than 88 million followers and had been retweeted billions of times.
“Trump has a very high and loyal following and a lot of those eyeballs will go away if Trump is permanently restricted from posting,” said Andrea Cicione, head of strategy at brokerage TS Lombard.
Other social media platforms, including Facebook Inc. (FB-Q), have been quick to issue similar bans on the outgoing president last week after the violence at Capitol Hill.
But the fall in Twitter’s shares was much heavier than for any of its peers.
U.S. media also reported San Francisco police were bracing for a possible protest by pro-Trump supporters outside Twitter’s headquarters on Monday.
Boeing Co. (BA-N) was down after down after one of its 737-500 jets, operated by Sriwijaya Air, plunged into the sea on Saturday with 62 people on board minutes after take off from Jakarta’s main airport.
The SJ 182 was headed on a domestic flight to Pontianak on Borneo island, about 740 kilometres from Jakarta, before it disappeared from radar screens four minutes after take-off and crashed into the Java sea.
Authorities pinpointed the area where the data recorders, known as black boxes, are located on Sunday as they lifted chunks of the fuselage off the sea bed. Rescuers have also found human body parts and their personal effects.
Marriott International Inc. (MAR-Q), the world’s largest hotel company, was lower after it said Sunday they will suspend donations to U.S. lawmakers who voted against certifying President-elect Joe Biden’s victory last week.
“We have taken the destructive events at the Capitol to undermine a legitimate and fair election into consideration and will be pausing political giving from our Political Action Committee to those who voted against certification of the election,” Marriott spokeswoman Connie Kim said, confirming a report in Popular Information, a political newsletter.
JPMorgan Chase said Sunday it will pause all contributions from its political action committee for at least the next six months, saying “the focus of business leaders, political leaders, civic leaders right now should be on governing and getting help to those who desperately need it most right now. There will be plenty of time for campaigning later.”
Citigroup Inc said in a memo to employees seen by Reuters that it reviewed lawmakers who led the charge against the certification of the Electoral College and found it gave $1,000 to the campaign of Republican Senator Josh Hawley.
Tesla Inc. (TSLA-Q) fell despite an equity analyst at Bank of America set a new Street-high target price for its shares.
John Murphy raised his objective to US$900 from US$500, which exceeds the consensus of US$477.53.
“While the company faces several operational/financial hurdles, including supply/demand challenges, potential future losses and cash burn, and the prospect of new competition and technology obsolescence, we believe the company can execute on further equity raises to fund accelerated growth and valuation higher,” said Mr. Murphy.
See also: Tesla market value crosses US$800-billion for the first time
With files from staff and wires
David Leeder