A roundup of some of the North American equities making moves in both directions today
On the rise
Domtar Corp. (UFS-T) was up 5.4 per cent on Friday after it reported net earnings of US$20-million or 32 cents US per share for the third quarter, compared to net earnings of US$99-million or US$1.57 per share for the third quarter of 2018.
Adjusted earnings came in at US$55 million or 89 cents US per share compared US$92-million or US$1.46 per share for the third quarter of 2018.
“Our results in Paper improved with lower maintenance and raw material costs offsetting market related downtime costs. Our paper machines ran well and cost performance was strong, resulting in a 300 basis point margin expansion for this business,” said president and CEO John Williams. “In Pulp, downward price adjustments continued in most regions but we are seeing increasing signs of improvement in supply and demand fundamentals.”
Shaw Communications Inc. (SJR-B-T) reversed early losses and gained 3.3 per cent after it reported profit of $167-million 32 cents a share in the latest quarter, down from $196-million or 38 cents a year ago.
Shaw linked the decline to lower equity income associated with its investment in Corus Entertainment and gains on asset sales a year ago, partially offset by lower restructuring costs this year.
Intel Corp. (INTC-Q) jumped 8.1 per cent on the heels of beating Wall Street estimates for third-quarter revenue and profit and raising its full-year revenue forecast, powered by sales to data centers and easing concerns about slowing demand during the U.S.-China trade war.
After years of acquisitions outside its core area of processing chips under previous leaders, Intel under Chief Executive Bob Swan has reined in spending, slowing investments in areas like memory chips and shedding struggling businesses.
RBC Dominion Securities analyst Mitch Steves said: “Intel reported solid results on higher than expected Data Center demand combined with in-line PC results. The company is still seeing CPU shortages and notes that it is continuing to ramp up on 10 nanometers and attempting to move to 7 nm as fast as possible. When we look at the results we think the primary conclusion is the same: Data Center demand came back and this should be reflected in AMD/NVDA results shortly as well. While our numbers come up for the full-year we still see risk to 2020 given competitive dynamics in the Data Center.”
Visa Inc. (V-N) increased 0.9 per cent after its quarterly profit beat analysts’ estimates on Thursday, helped by growth in overall customer spending, which boosted fees for the world’s largest payment processor.
On an adjusted basis, Visa earned US$1.47 per share in the fourth quarter, while analysts on average had expected a profit of US$1.43, according to Refinitiv data.
RBC Dominion Securities analyst Daniel Perlin said: “Visa’s F4Q19 results and FY20 outlook supports its long-term double-digit compounding growth model and illustrates the multiple avenues of growth, including driving deeper into existing partners, as illustrated by its unprecedented 30-per-cent renewal rate in Q4/19.”
Following an almost 19-per-cent jump in share price on Thursday, Tesla Inc. (TSLA-Q) was up 9.3 per cent on Friday after it started selling its China-made Model 3 with an autopilot function priced from 355,800 yuan (US$50,310), making it the company’s cheapest model on sale in the country, the official website showed.
It suspended website sales of a less expensive variant of the same model, lacking an autopilot function, it had previously offered at 328,000 yuan (US$46,389).
On the decline
CannTrust Holdings Inc. (TRST-T) lost 6.9 per cent after it announced late Thursday it will temporarily cut its workforce by about a quarter, or roughly 140 people, seeking to recoup losses after Health Canada suspended its license to grow and sell cannabis.
The company expects the cut to save about $400,000 each month, but faces severance costs of up to $800,000 if the employees are not recalled within 35 weeks, it said in a statement.
The Canadian health regulator canceled CannTrust’s license in September, months after finding it was illegally cultivating pot.
Before the bell, an equity analyst at CIBC World Markets downgraded Hexo shares, pointing to “worrisome signs.”
Amazon.com Inc. (AMZN-Q) slipped 1.1 per cent after it forecast revenue and profit for the holiday quarter below expectations after the bell on Thursday, as it faces fierce competition and rising costs from its plan to speed up delivery times globally.
Revenue growth for the company’s lucrative cloud computing business also slowed down in the third quarter, missing analysts’ estimates. Amazon beat expectations on overall third-quarter revenue, posting sales up 24 per cent to US$70-billion.
The news underscores the big investment Amazon is making to cut delivery times to one day for its Prime loyalty members, a way to outmaneuver rivals such as Walmart Inc that have marketed two-day shipping without subscription fees.
In a research note, Credit Suisse analyst Stephen Ju said: “Forward purchasing ahead of a consumption tax hike in Japan as well as the Diwali Holiday shift in India contrived to add noise around 3Q19 and 4Q19 growth, but we look through these near term issues and submit that the more important signals are the absolute unit growth and revenue acceleration that 1-Day Prime is delivering as well as the step-up in capitalized leases for AWS. And as the Shipping and Fulfillment costs needed to drive the former as well as the incremental sales personnel/headcount and hence Marketing costs for AWS are now out in the open and weaved into estimates, the likelihood of further surprises to the downside on profit dollars diminish on the back of this result. As we noted before, we continue to favor this more aggressive stance from the company as it endeavors to put greater distance between its consumer value proposition and that of its competitors. Hence despite short term dip in operating income, we submit that this augers potentially faster GMV/revenue [gross merchandise volume to revenue] growth in the out years and a steeper FCF [free cash flow] ramp as a result. Our investment thesis remains: 1) e-commerce segment operating margin expansion as it grows into its larger infrastructure, 2) optionality for faster-than-expected FCF growth vis-à-vis its advertising segment, and 3) upward bias to AWS revenue forecasts and likely more moderate deceleration path as suggested by ongoing capital intensity in the business.”
Verizon Communications Inc. (VZ-N) dipped 0.4 per cent after beating Wall Street estimates for third-quarter profit and revenue on Friday, as the largest U.S. wireless carrier by subscribers signed up more mobile phone customers who pay a monthly bill.
The company’s strategy of focusing on the core wireless business has often been contrasted with that of AT&T, its next largest competitor, which has invested in media content to grow the company.
Meanwhile, rivals T-Mobile US Inc and Sprint Corp have been locked in a lengthy merger process.
With files from Terry Weber, Brenda Bouw and wires