A roundup of some of the North American equities making moves in both directions today
On the rise
TD was up 0.8 per cent after gaining 2.2 per cent on Thursday, while Royal Bank increased 1.2 per cent following a 2.4-per-cent decline.
In a research report on TD released Friday, CIBC World Markets analyst Robert Sedran said: “After an abysmal Q1 in the capital markets business overwhelmed an otherwise solid result last quarter, we were looking for some semblance of normal to return to the results. It did, with Wholesale Banking returning to solid profitability and the rest of the bank continuing to post many of the favorable trends it has been showing. We had assumed as much, which is why estimate revisions were modest, but it is nevertheless heartening to have our view supported by the results. Since the weak Q1, the shares have lagged, though they recaptured some of the lost relative P/E multiple as the market digested the numbers. At the close on [Thursday], the shares traded at 10.8 times our fiscal 2019 EPS estimate, which compares with the peer average of 9.9x times We think there is more to come and rate the shares Outperformer.”
In a separate note on RBC, Mr. Sedran said: “Our first look at the results called them solid and the stock underperformed. After a more detailed review, we stand by that original view – not an excellent quarter, mind you, as loan losses and expenses were elevated and offset by stronger market sensitive revenues – but a solid one across a number of businesses and all supported by management’s confidence in delivering growth that falls inside the bank’s 7-10-per-cent growth range. That view is broadly consistent with our prior estimates (admittedly to the low end of that range) and so we have made only minor changes to numbers. We think the underperformance on earnings day reflects more the premium with which it entered the day rather than any concerns over the outlook.”
Shares of Newmont Goldcorp Corp. (NGT-T) were up 0.8 per cent after Mexico’s deputy economy minister responsible for mining said stoppages at its Penasquito gold mine in Mexico are costing “millions” every day to both public coffers and the company.
On Thursday, Francisco Quiroga told reporters in Mexico City that he wanted operations at the country’s largest gold mine to continue.
“Every day that it’s shut, there are millions lost for the company and for public coffers,” Mr. Quiroga said, Though he did not provide specifics on the losses being sustained, he said Penasquito contributed 700 million pesos (US$37-million) to a social fund paid from a mining tax.
The open-pit mine, in northern Zacatecas state, produced 272,000 ounces of gold in 2018, company figures show. It accounts for about 17 per cent of Newmont Goldcorp’s net asset value, according to Scotiabank.
Aphria Inc. (APHA-T) shares jumped 14.6 per cent after an equity analyst at Jefferies initiated coverage of its stock with a “buy” rating, believing its current valuation is"not reflective of reality" and expecting a “significant re-rating."
A day after its stock jumped over 9 per cent on the announcement of a $505-million acquisition of Global Restoration Holdings LLC, FirstService Corp. (FSV-T) continued to rise, sitting 1.1 per cent higher.
BMO Nesbitt Burns analyst Stephen MacLeod said: “Global gives FirstService Brands (FSB) a presence in the North American commercial and large loss property restoration industry, establishing another vertical that FSB can grow organically and through tuck-ins.
“While leverage ticks higher (~2.8x 2019E ND/EBITDA), we expect it to decline fairly rapidly in light of FirstService’s strong FCF profile.”
Amazon.com Inc. (AMZN-Q) shares jumped 0.4 per cent after an equity analyst at Piper Jaffray said its shares may reach US$3,000 “by sometime between mid-’21 and mid-’22 or within 24-36 months.”
Michael Olson said: "Our confidence in this 65% move is based on what we believe to be relatively conservative growth and valuation assumptions that are incorporated into our sum-of-the-parts (SOTP) analysis. Specifically, we assume a multi-year deceleration in growth for every major category of Amazon’s business, along with very minimal adjustment to comp group multiples, despite Amazon growing significantly faster than comps in both the cloud (AWS) and advertising segments. Additionally, we assign a discounted multiple vs. ecommerce comps for the retail segment. We have a high degree of confidence that AMZN shares can reach this level with no major acquisitions or other significant changes to the business. An potential AWS spin-off, however, would, no doubt, help to highlight the relatively low valuation of the other segments."
“A trading date will be announced ... upon the company’s Form 40-F registration statement becoming effective with the United States Securities and Exchange Commission,” it stated.
On the decline
Foot Locker Inc. (FL-N) plummeted 16 per cent after it missed quarterly profit and same-store sales estimates.
Before the bell, the U.S. footwear retailer reported sales and earnings per share for the first quarter of US$2.078-billion and US$1.52, both missing the Street’s expectations (US$2.11-billion and US$1.60).
The company said it remains on track to reach its previously stated full-year outlook, including sales, gross margin, and SG&A. Its earnings per share are now expected to be up high-single digits based on the share repurchase activity to date.
“Based on the momentum we have underway, we feel confident that the updated strategic imperatives we introduced at our Investor Day in March position us to deliver on our long-term goals," said president and chief executive officer Richard Johnson.
With files from staff and wires