A roundup of some of the North American equities making moves in both directions today
On the rise
The company said it now expects to spend between $2.3-billion and $2.5-billion in 2020, down from its previous guidance of $3.2-billion–$3.4-billion.
Calgary-based Husky also lowered its 2020 annual production forecast to about 275,000-300,000 barrels of oil equivalent per day (boepd), compared with its prior forecast of about 295,000-310,000 boepd.
Earlier this week, major rivals Cenovus Energy and MEG Energy also announced cuts in their 2020 capital budgets, after crude prices slumped to their lowest levels in more than three years.
In a research note released before the bell, Canaccord Genuity analyst Dennis Fong said: “We expect the company will continue to evaluate further options to reduce both costs and capital spending, which could also include both the $500-million of dividends per year and evaluating optionality around timing and spending on the West White Rose project. Notwithstanding the magnitude of the capital cut, we expect modest production impacts both this year and next given the nature of the company’s low decline assets. Further to this, as the company is finishing its Spruce Lake North and Central projects (but not bringing them onstream) we believe there is a possibility the company could see growth if the commodity price environment improves so that there is economic viability to bring those projects online.”
The oil and gas producer says it has reduced its capital budget for this year to no more than $300-million compared with an earlier plan to spend $500-million.
AltaCorp Capital’s Patrick O’Rourke said: “The announcement follows the same theme that we have seen from a number of other upstream producers, reducing 2020 capital expenditures (40 per cent) in-light of the current global commodity and economic weakness, as well as reducing the dividend by 60 per cent. In our view, the move will likely be viewed positively by investors (within the context of a volatile market) with the Company working aggressively to ease any upcoming financial pressure that the dividend or capital program may have implied in models. 2020 production is reduced modestly – as we have commented in the past, H2/20 growth was largely a function of prior longer cycle investments, with the question being 2021 and beyond (including any Attachie development capital decisions).”
Analysts were expecting revenue of $812-million. Its net loss for the period was $16.8-million or 61 cents per share compared to a loss of $36-million or $1.30 per share a year earlier.
The California-based company also said the coronavirus will have “minimal impact” on the fourth-quarter revenue, which is usually skewed toward software licenses rather than hardware.
“We expect minimal impact from the virus in the quarter, given that much of the subscription revenue is already contracted,” Chief Executive Officer Safra Catz said on an earnings call with investors.
The business software maker’s cloud services and license support unit, which accounts for more than half of its revenue, grew 4 per cent to US$6.93-billion in the third quarter.
In a research note, Citi analyst Walter Pritchard said: “ORCL shares have had little to celebrate for several quarters despite low expectations. Q3 is a relative bright spot after several underwhelming quarters. That said, with an increasingly bleak macro backdrop, it is still hard for us to have conviction that revenue will meaningfully accelerate in Q4 beyond guidance.”
Gap Inc. (GPS-N) were up 7.2 per cent on the heels of forecasting 2020 profit above market expectations on Thursday as it pushes through its restructuring plan, but said it expected an impact of US$100-million in first-quarter sales due to the fast-spreading coronavirus in Asia and Europe.
The supply chain disruptions due to the global health crisis is the latest headache for newly named Chief Executive Officer Sonia Syngal as she tries to revive the brand once known for its signature hoodies and affordable options for the entire family.
“Due to the evolving coronavirus situation, we are facing a period of uncertainty regarding the potential impact on both our supply chain and customer demand,” Ms. Syngal said in a statement.
Citi analyst Paul Lejuez said: “The quarter was better than expected driven by Old Navy but the company continues to struggle at its other brands. And with the macroeconomic environment getting increasingly volatile, we expect it to be even more challenging for GPS to drive traffic to its mall-based stores. Given these concerns, we believe shares will remain pressured near term.”
Walt Disney Co. (DIS-N) increased 11.1 per cent in the wake of announcing it will close its theme parks in California and Florida and its resort in Paris from this weekend through the end of the month due to the global outbreak of coronavirus.
Disney Cruise Line will suspend all new departures starting Saturday through the end of the month, the company said.
“We are proceeding with the closure of our theme parks at Walt Disney World Resort in Florida and Disneyland Paris Resort, beginning at the close of business on Sunday, March 15, through the end of the month,” the company said in a statement.
Disney earlier had said that its Disneyland and California Adventure theme parks in Southern California would be closed from Saturday.
The hotels at both Walt Disney World and Disneyland Paris will remain open until further notice, the company added.
Credit Suisse analyst Douglas Mitchelson said: “While our new assumptions carry a high degree of uncertainty given the rapidly changing backdrop, we felt the Parks closures, sporting event suspensions, production delays and likely advertising impacts needed to be addressed. We expect Disney’s businesses will have recovered by 2021 or 2022, with its Parks, Content and Digital business remaining very well positioned, while Media Networks will be dependent on pay TV trends not worsening and sports viewing rebounding once games are back on the air.”
Broadcom Inc. (AVGO-Q) closed up 7.1 per cent on the back of withdrawing its revenue forecast for 2020 on Thursday, joining a host of chipmakers that have either cut or pulled their sales outlook due to disruptions in global supply chain caused by the coronavirus outbreak.
Nearly 20 per cent of Broadcom’s revenue in 2019 came from Apple Inc , which was the first big technology company to say the epidemic was hurting its production and demand in China.
“We did not see any material impact on our businesses due to COVID-19 in our first quarter. However, visibility in our global markets is lacking and demand uncertainty is intensifying,” Chief Executive Officer Hock Tan said.
The chipmaker said it expects second-quarter revenue of US$5.7-billion, plus or minus US$150-million, below analysts’ average estimate of US$5.94-billion, according to IBES data from Refinitiv.
On the decline
The B.C.-based company is offering 7.25 million shares, pre-funded warrants to buy 11.75 million common shares, and accompanying warrants to buy 19 million common shares.
Workplace communication platform Slack Technologies Inc. (WORK-N) was down 8.2 per cent after it forecast a soft revenue outlook for the first quarter on Thursday.
The company warned the coronavirus outbreak could hurt demand for its products as companies might cut back on technology spending and also forecast billings for fiscal 2021 well below analysts’ estimates.
For the first quarter, Slack expects revenue of US$185-million to US$188-million, lower than analysts’ average estimate of US$188.4-million, according to IBES data from Refinitiv.
The company said it expects billings of US$970-million to US$1-billion for fiscal 2021, lower than analysts’ average estimate of US$1.02-billion.
Citi analyst Walter Pritchard said: “We believe lower guide on COVID is prudent and may set shares up better in 3 months. However, with still high expectation and seasonality not well established, the lower FY20/Q1 billings may fuel fundamental concerns.”
With files from Brenda Bouw, staff and wires