A roundup of some of the North American equities making moves in both directions today
On the rise
Boeing Co. (BA-N) was up 1.4 per cent after the company said a software upgrade for the 737 MAX aircraft will be rolled out in the coming weeks, and that its timeline for deploying the upgrade had not changed.
The Seattle-based company, which is currently the world’s largest planemaker, has fallen over 10 per cent this week after its 737 MAX jets were grounded globally following a fatal crash in Ethiopia.
Stella-Jones Inc. (SJ-T) rose 0.8 per cent after its fourth-quarter financial results fell short of the Street’s expectations.
The Montreal-based producer and marketer of pressure treated wood products reported sales and earnings per share of $432.8-million and 30 cents, respectively, missing the consensus projections of $437.6-million and 41 cents.
For 2019, the company expects a year-over-year improvement in both sales and margins across all its product categories.
It increased its quarterly dividend by 16.7 per cent to 14 cents per share.
“For the year, sales amounted to $2.1 billion and increased in all product categories, driven by a combination of sales price increases, market demand and acquisitions. Our EBITDA was up marginally for the year, while our net income was down primarily due to a one-off non-cash tax benefit resulting from the U.S. tax reform in 2017. Stella-Jones remains in a very healthy financial position and today announced a dividend increase, for the fifteenth consecutive year,” said president and chief executive Brian McManus in a statement.
The online retail giant has now earned a buy-equivalent rating from every analyst on the Street currently covering the stock.
“We see an inflection point in Amazon’s profits over the next three years driven by improving retail margin expansion coupled with the mix shift to higher margin AWS and advertising segments that combined could top $100 billion by 2022 (25 per cent of sales) vs. $10 billion in 2015,” said Edward Yruma.
On the decline
Air Canada (AC-T) fell 0.7 per cent after announcing Friday morning that it has suspended its financial guidance for both the first quarter and full year 2019 following the decision to ground Boeing 737 Max aircraft.
“Air Canada continues to adapt a contingency plan to address the evolving situation and will provide updates as developments warrant,” the company said in a release.
The airline would face the costs of re-booking passengers after the planes were grounded, and other costs from not having scheduled access to the more efficient MAXes, said AltaCorp analyst Chris Murray.
Compared with its existing Airbus A320s, the airline had estimated that the MAX 8 aircraft would deliver 11-per-cent lower cost per available seat mile (CASM), a closely-watched industry metric, driven by savings on fuel and maintenance costs.
But Mr. Murray said he expected Air Canada would find a way to “mitigate” the impact of higher costs, and noted the company’s forecast for annual profit margin remained in place for 2020 and 2021, suggesting this would be “a short term disruption.”
Imperial Oil Ltd. (IMO-T) was down 1 per cent after announcing it has slowed the pace of development of its Aspen oil sands project “given market uncertainty stemming from Alberta government intervention and other industry competitiveness challenges.”
Pointing to a limited winter drilling and site preparation season, Imperial said the slowdown is likely to bring a delay of at least one year.
“This was a difficult choice in light of our final investment decision on Aspen announced last November,” said chairman, president and chief executive officer Rich Kruger. “However, we cannot invest billions of dollars on behalf of our shareholders given the uncertainty in the current business environment. That said, our goal is to ensure the work we do this year will enable us to effectively and efficiently resume planned activity levels when the time is right.”
Shares of Tesla Inc. (TSLA-Q) dropped 5 per cent following the Thursday night’s unveiling of its Model Y electric sports utility vehicle. Chief Executive Elon Musk said the compact SUV, built on the same platform as the Model 3, would first debut in a long-range version with a range of 300 miles (482 km) priced at US$47,000.
The Street appeared unimpressed by the vehicle.
David Tamberrino, an equity analyst at Goldman Sachs, said: ““With the Model Y vehicle only priced at a $4k premium to the Model 3, we think investor focus will hone in on potential cannibalization of already waning Model 3 demand and the company delivering on margins as it moves to larger scale production. And with no incremental products unveiled (like the pickup truck the company is working on or a potential refresh of the S/X) and no further commentary on Model 3 demand (which investors have been looking for), we think shares could see pressure in trading today.”
The North West Company Inc. (NWC-T) was down 0.9 per cent following the release of weaker-than-anticipated fourth-quarter results .
On Thursday afternoon, the rural retailer reported revenue of $532.5-million, up 7.1 per cent and above the Street’s expectation of $529.2-million.
However, adjusted EBITDA and earnings per share of $40.5-million and 36 cents were drops from the same period a year ago ($43.8-million and 39 cents) and fell short of estimates ($52.7-million and 49 cents).
Industrial Alliance Securities analyst Neil Linsdell said: "Although Q4 results were disappointing, the drivers of the shortfall were mostly one-time in nature, although insurance costs will be higher in northern Canada and the Caribbean in 2019, and ongoing expenses at the airline may be higher in the near term. We remain slightly more cautious in the short term, hence the negative impact expectation, as we await additional details on the conference call to gauge the full impact, but continue to see efforts to improve the longer-term health and profitability of the Company, and the Board’s decision to increase the dividend provides confidence in the outlook."
AutoCanada Inc. (ACQ-T) dropped 6.2 per cent after reporting a same-store revenue decline 3 per cent of in the fourth quarter. Its net loss attributable to shareholders came in at $26.9-million or 98 cents, versus a profit of $8.9-million or 62 cents a year ago. Adjusted earnings came in at a loss of 34 cents compared to a profit of 33 cents a year earlier. Analysts were expecting adjusted earnings of 18 cents and revenue of $770.5-million.
“A number of months ago, we set out on an ambitious course to improve our operations and become the industry leader,” said executive chairman Paul Antony in a release. “We have implemented the main parts of our Go Forward Plan in Canada and we are already seeing strong signs of adoption across our dealership network. As our new initiatives take hold, we foresee very material improvements in our performance in 2019. As such, despite being faced with increased headwinds over the past number of months, we remain committed to delivering on our goals for 2019”
Oracle Corp. (ORCL-N) sat down 0.2 per cent after its revenue guidance, released with in-line third-quarter results, fell short of what analysts on the Street were expecting.
“We expect the market will look at Q3 as ‘more of the same’ with out-quarter/year numbers coming down and goals like ‘re-acceleration’ lapsing with no progress,” said Citi analyst Walter Pritchard. “While buy-back is supporting EPS and likely the stock, it doesn’t appear sustainable.”
BMO Nesbitt Burns analyst Keith Bachman downgraded his rating for Oracle shares to "market perform," pointing to a "more balanced" risk/reward proposition.
Mr. Bachman said: “We believe that Oracle can sustain 2 per cent CC revenue growth, but we are dubious that Oracle can improve revenue growth rates. Therefore, we do not think Autonomous database or gradual unfolding of the cloud ERP market will help Oracle’s growth in FY20.”
Facebook Inc. (FB-Q) lost 2.5 per cent in the wake of the departure of chief product officer Chris Cox, who was one of the social media company’s earliest employees.
“As Mark [Zuckerberg] has outlined, we are turning a new page in our product direction, focused on an encrypted, interoperable, messaging network ... This will be a big project and we will need leaders who are excited to see the new direction through,” Cox said in a Facebook post.
Also departing is WhatsApp Vice President Chris Daniels, adding to a string of recent high-profile exits from Facebook’s product and communications teams.
Will Cathcart, vice president of product management, will now lead WhatsApp, and Head of Video, Games and Monetization Fidji Simo will be the new head of the Facebook app, Zuckerberg said.
Snap Inc. (SNAP-N), the parent of Snapchat messaging app, erased early gains and sat 1.1 per cent following a report that it plans to announce its gaming platform for developers next month.
The platform, codenamed “Project Cognac,” is expected to feature a handful of games from outside developers designed to work specifically in the Snapchat app.
With files from wires and staff