A humorous look at the companies that caught our eye, for better or worse, this week
Hands up if you’re thinking of cancelling your holiday travel plans. Thought so. With the fast-spreading Omicron COVID-19 variant triggering travel advisories and restrictions around the world, shares of online lodging marketplace Airbnb have been in a free fall. This week, the stock extended its losses after RBC analyst Brad Erickson cut his rating on the shares to “sector perform” from “outperform,” warning of potential pockets of rental softness in 2022 and the possibility that “Omicron cancellations could certainly be an incremental headwind here.” With the stock down about 25 per cent since mid-November, Airbnb investors are planning a staycation.
Terminix Global Holdings (STAR)
Most people hate cockroaches, termites and mice. But for Terminix Global Holdings, the little varmints are worth their weight in gold. Shares of the U.S.-based pest-control company surged after it agreed to be acquired by British rival Rentokil Initial PLC in a cash-and-shares deal that valued Terminix at about US$6.7-billion or US$55 a share. The companies said the merger will create a “global leader in pest control,” with 56,000 employees serving nearly five million customers around the world, and create a “strong platform for growth.” The pests were not consulted on the deal.
Adobe Systems (DOG)
When a stock trades at 20 times earnings, it’s usually no big deal. But when it trades at more than 20 times sales? Watch out. Shares of Adobe Systems tumbled after JPMorgan downgraded the cloud-based software giant – best known for products such as Photoshop and Acrobat Reader – citing its rich valuation and expectations that higher interest rates will compress multiples for high-growth tech stocks. Adobe – whose shares had tripled in the past three years – got slammed again just days later when the company’s first-quarter forecast fell well short of analysts’ estimates. Well, it was a fun ride while it lasted.
You might say Wayfair’s stock is way far down. Shares of the online furniture and home-decor retailer had soared in the early stages of the pandemic when locked-down consumers were ordering everything from sofas to bedroom sets. But since hitting a record high last January just as vaccines were rolling out in the U.S., the shares have been nearly cut in half. Analysts don’t expect a rebound any time soon: Citing the return of in-person shopping and surging inflation that is making furniture more expensive, BofA Global Research analyst Curtis Nagle cut the shares to “underperform” and slashed his price target to US$175 – way below his previous target of US$265.
Valens Co. (DOG)
Business quiz! Valens Co. is: a) a music-publishing firm that owns the rights to the complete Van Halen catalogue; b) an Italian winery owned by the descendants of Flavius Valens, a Roman emperor from 364 to 378; c) a cannabis company based in Kelowna, B.C., whose stock fell sharply after it announced a secured term loan from a private lender for up to $40-million – at a stiff annual interest rate of 10 per cent. Answer: c.
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