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A look at North American equities heading in both directions

On the rise

Maxar Technologies Inc. (MAXR-T) surged after it said on Friday private-equity firm Advent International will buy the satellite owner and operator for about US$4-billion.

Advent has offered US$53 per Maxar share held, a premium of nearly 129 per cent to the stock’s last close.

Westminster, Colorado-based Maxar, has more than 90 satellites in orbit that provide communications, imagery and data to customers including the U.S government, Intelsat and SiriusXM.

Images of the battlefield in Ukraine are often provided by Maxar. The company is also involved with the National Aeronautics and Space Administration’s Artemis program to return to the moon.

Advent has invested nearly $28 billion in defense, security and cybersecurity in the last three years, with its portfolio companies supporting many satellite and defense platforms and serving the U.S. government and its allies.

The Maxar deal is valued at US$6.4-billion, including debt, and is expected to close in mid-2023. The agreement also includes a 60-day “go-shop” period.

Funds advised by Advent have committed up to US$3.1-billion, while British Columbia Investment Management Corp will provide a minority equity investment equal to US$1.0-billion.

Maxar, whose history can be traced back to 1950s, has lost about 20 per cent in market value so far this year, compared to drops of more than 50 per cent for other satellite imagery companies such as Satellogic Inc. (SATL-Q) and Spire Global Inc. (SPIR-N) that went public through mergers with blank-cheque firms.

Enghouse Systems Ltd. (ENGH-T) was higher with better-than-anticipated quarterly results.

After the bell on Thursday, the Markham, Ont.-based software and services company reported revenue of $108.1-million for its fourth quarter ended Oct. 31 compared to revenue of $113.1-million a year ago. The expectation was for revenue of $103.7-million in the latest quarter, according to S&P Capital IQ.

Net income was $36.9-million or 67 cents per share compared to $30.2-million or 54 cents a year ago.

Adobe Inc. (ADBE-Q) gained after the company forecast first-quarter profit above expectations.

Before the bell, it forecast first-quarter adjusted earnings per share in the range of US$3.65 to US$3.70, exceeding the consensus estimate on the Street of US$3.64.

“Adobe delivered solid results in the quarter continuing to show resiliency in an uneven macro environment as sentiment continues to improve around the business,” said RBC analyst Matthew Swanson. “On results, net-new Digital Media ARR had a good beat of 4.5 per cent vs. 4.4 per cent in Q3 while topline growth was again largely in line with expectations. The growth in Digital Media ARR was reflected in management’s commentary around creative, noting rapid progress around Express as the company executed well against a seasonally strong pipeline with solid results across SMB and enterprise. On the DX side, the company achieved its first $1-billion subscription revenue quarter as it saw “significant” bookings out of EMEA for newer offerings despite the macro challenges. Results out of EMEA are reflective of the broader durability trends from DX seeing enterprises continuing to make investments in digital transformation through the macro uncertainty. Guidance was maintained from Max in mid-October while the strength of the Q1 net-new Digital Media ARR guidance creates a more favorable setup from a seasonality standpoint. Given the uneven macro, the quarter and the guidance should be well-received.”

On the decline

A day after dropping over 17 per cent, First Quantum Minerals Ltd. (FM-T) fell further after saying Friday it is doing everything possible to support its operations in Panama, “including through all available legal means, expressing disappointment in the “government’s unnecessary actions.”

Panama shopping First Quantum’s Cobre Panama mine to third parties, as its president orders shutdown

Panama’s government ordered the firm on Thursday to pause operations at its flagship copper mine after missing a deadline to finalize a deal that would have increased annual payments to the government from the mine to at least $375 million.

The parties “came very close to an agreement,” the miner said in a statement.

First Quantum noted Thursday the deal was not finalized because “necessary legal protections on termination, stability and transition arrangements could not be agreed.”

The Panamanian government hired financial advisers to explore alternatives with other firms within the last months, according to a source familiar with the matter.

The copper mine is considered the largest private investment in Panama and accounts for roughly 3.5 per cent of its gross domestic product.

Algonquin Power & Utilities Corp. (AQN-T) was lower after the U.S. Federal Energy Regulatory Commission rejected its proposed $2.6-billion acquisition of regulated utility assets in Kentucky on Thursday.

FERC ruled applicants have “failed to demonstrate that the Proposed Transaction will not have an adverse effect on rates” and “failed to provide adequate information to demonstrate what, if any, effect the Proposed Transaction will have on rates.”

See also: Friday’s analyst upgrades and downgrades

Goldman Sachs Group Inc. (GS-N) declined after news platform Semafor reported on Friday it will lay off up to 4,000 people as the Wall Street bank struggles to meet profitability targets.

Managers across the firm have been asked to identify low performers for what could be a cut of up to 8 per cent to its workforce early next year, the people said, with some cautioning that no final list has been drawn up, according to the report.

The bank said in September it was planning to cut jobs, after pausing the annual practice for two years during the pandemic, a source familiar with the matter told Reuters at the time.

Goldman’s headcount swelled to over 49,000 at the end of September, up 14 per cent from a year earlier. The investment bank had first warned in July it might slow hiring and cut expenses.

Global banks, including Morgan Stanley (MS-N) and Citigroup Inc (C-N), have reduced their workforce in recent months as a dealmaking boom on Wall Street has fizzled out due to high interest rates and soaring inflation.

Accenture Plc (ANC-N) was lower as it outlined weakness in its consulting business and forecast lower-than-expected quarterly sales overall, signaling pressure as companies postpone business improvement projects amid economic uncertainty.

After a boom during the pandemic, spending on IT and transformation projects is normalizing as companies see growth slowing. Firms are prioritizing shorter-duration projects with stronger return-on-investments, Piper Sandler lead analyst Arvind Ramnani wrote in a recent note to investors.

Customers “are more and more focused on cost resilience and many of them are having to make really hard choices,” said Chief Executive Officer Julie Sweet in a post-earnings conference call.

The strategy and consulting business will suffer a slight decline in sales in the second quarter, said Sweet, adding that the weakness is coming from industries such as retail and consumer goods.

For the current quarter, Accenture forecast revenue in the range US$15.20-billion to US$15.75-billion. The mid-point of the guidance is lower than analysts’ estimate of US$15.61-billion, according to Refinitiv.

A lower forecast by Accenture, considered the IT services and consulting bellwether, is a worry for the sector.

Last month, Cognizant Technology Solutions Corp. (CTSH-Q) slashed its revenue and adjusted earnings guidance for the full-year ending Dec. 31, citing higher costs and pullback in contracts.

With files from Brenda Bouw, staff and wires

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