A roundup of some of the North American equities that made moves in both directions
On the rise
Aurora Cannabis Inc. (ACB-T) jumped 66.9 per cent on Friday after it posted a smaller loss compared with the prior quarter as customers in the United States and Canada stockpiled cannabis ahead of lockdowns.
Before the bell, a group of equity analysts raised their ratings for the Edmonton-based producer in response to the earnings release.
Aurora sold 12,729 kilograms of cannabis in the third quarter, 39 per cent more than a year earlier. The sales spike comes as cannabis is an essential service in several provinces and states across Canada and the Unites States.
Its reported quarter was the first full period of sales in its so called cannabis 2.0 portfolio, which includes vapes, edible gummies, chocolates and beverages, products that customers rushed to stock up ahead of the COVID-19 lockdowns.
The company said it was on track to be profitable in the next fiscal year and doubled down on its plans to keep capital expenditure below $100-million in the second half of the year.
Aurora said it expected capital spending in the first quarter of fiscal 2021 to be lower than the third and fourth quarters of 2020.
The Toronto-based miner reported EBITDA and cash flow per share of US$48-million and 16 US cents, respectively, falling short of the Street's forecast of US$53-million and 19 US cents.
Industrial Alliance Securities analyst George Topping said: “While the Company remains challenged in the short term by lower copper prices, there is a substantial opportunity from Lalor/New Brit.’s gold production. Additionally, mining the higher-grade Pampacancha, at last, would also materially boost 2021 despite 777 closing. We note, top shareholders are focusing on future growth and have bought 16 mllion shares year-to-date.”
U.S. office supply retailer Office Depot (ODP-Q) was 6.8 per cent higher after saying late Thursday it plans to cut about 13,100 jobs and close certain retail stores by the end of 2023, in a bid to curb costs and focus on its IT services business units.
The company expects the restructuring to yield up to US$860-million in net savings by 2023 end and incur charges of up to US$543-million.
Office Depot said the charges include costs related to potential retail store and distribution facility closures and headcount reductions.
The company said it is still evaluating the number of potential store closures.
Earlier this month, the retailer withdrew its 2020 guidance, citing global business disruption and uncertainty caused by the COVID-19 pandemic.
China’s JD.com Inc. (JD-Q) beat analysts’ estimates for quarterly revenue and profit on Friday, as stay-at-home customers turned to its online platform for daily groceries and shopping needs, sending its U.S.-listed shares up 3.9 per cent.
The company, which is working on a second listing in Hong Kong, is also benefiting from an in-house logistics and warehousing unit that is supporting the current surge in online orders.
Sales in its product segment, which includes online retail sales, rose about 20 per cent to 130.09 billion yuan (US$18.31-billion), beating estimates of 123.62 billion yuan, according to IBES data from Refinitiv polled by three analysts.
JD has been competing heavily with Alibaba Group Holding Ltd and Pinduoduo Inc for a share in the current surge in online shopping.
Onex Corp. (ONEX-T) gained 1.2 per cent in the wake of saying it swung to a significant loss in the first quarter as a result of market volatility and economic disruption from the COVID-19 outbreak.
The investment management firm, which reports in U.S. dollars, says it had a net loss of $1.1-billion or $10.34 per diluted share for the quarter ending March 31, compared with net earnings of $195-million last year.
The Toronto-based firm says $985-million of the losses were from its investing segment as the pandemic pushed down markets in March and created a broad net decline in the fair value of its underlying portfolio investments.
Onex says the decrease in fair value of its investments ranged from declines of between one per cent and 77 per cent, including declines in Parkdean Resorts, and WestJet Airlines that it took over last year.
It says that, as of the end of March, it had about $6-billion in shareholder capital under management.
Walt Disney Co. (DIS-N) increased 2.7 per cent despite reaching an agreement with unions representing workers at Florida’s Walt Disney World on safeguards to protect employees from coronavirus, a union statement said on Thursday, removing one of the company’s hurdles to reopening its popular theme parks.
The measures include social distancing practices, increased cleaning and mandatory masks for workers and guests, according to a statement from the Service Trades Council Union (STCU), which represents about 43,000 workers at Walt Disney World in Orlando, Florida.
Disney has announced that some retail stores and restaurants in the Disney Springs shopping area in Orlando will open on May 20, but the company has not set a reopening date for any of its four theme parks in Florida.
The entertainment giant shut its parks in Asia, France and the United States starting in late January to help prevent the novel coronavirus from spreading.
Nike Inc. (NKE-N) rose 0.5 per cent after it said after the bell on Thursday store closures across the globe will hurt its retail and wholesales businesses in the fourth quarter, even as it ramps up its e-commerce capabilities to address increased online orders amid the COVID-19 pandemic.
The sportswear maker forecast a hit to its fourth-quarter financials in all the geographies where its products are sold, as only 5 per cent to 40 per cent of Nike-owned stores are open there.
However, the company said all Nike-owned stores are open in China, while more than 95 per cent are open in South Korea, some with reduced hours. It added that traffic remains below prior year levels.
The company also said it is seeing increased new member acquisitions and the strong digital demand is partly offsetting declines in its owned stores and wholesale channel.
Nike has been reopening stores in more than 15 countries including Germany, France, Brazil and the United States.
On the decline
Raymond James analyst Rahul Sarugaser said: “So, [majority-owned cannabis producer Pure Sunfarms Corp.] did it again. Its sixth consecutive EBITDA-positive quarter: a record among Canadian LPs. Also, this was its fifth consecutive quarter of positive net income. Importantly, we saw a massive jump in PSF’s branded adult-use sales during the quarter: from US$1.1-million to US $4.6-million. This, in concert with a nice comeback in wholesale revenues, gave rise to a healthy balancing of PSF’s revenue channels: 47-per-cent adult-use; 53-per-cent wholesale. We could get used to this dual-income modus operandi. While top-line revenue did not meet our optimism, bottom-line sure did, which speaks to VFF’s outstanding operational efficiency.”
Chip gear maker Applied Materials Inc. (AMAT-Q) lost 4.4 per cent after it said it expects supply chain to gain strength in the second half of the year and help it recoup sales lost due to the COVID-19 disruption.
The company had earlier said that government restrictions in the United States and other countries as well as reductions in airline schedules globally were disrupting its supply chain.
Revenue from semiconductor systems, which supplies gears to chip makers, jumped about 18 per cent to US$2.57-billion in the second quarter.
Chief Financial Officer Daniel Durn said sales from the unit would have been nearly US$650-million higher in the absence of pandemic constraints. “We hope to recover this revenue in Q3 and Q4 as the supply chain improves,” he said.
RBC Dominion Securities analyst Mitch Steves said: “AMAT reported solid results and provided guidance that was not anticipated by most investors we spoke with. Key highlights include: 1) strong demand in memory/foundry continues, allowing the Company to state that double digit growth for FY20 is possible for the Semi Systems business, 2) display revenues for FY20 were guided to be similar to FY19 results, 3) the supply chain is improving, 4) all segments should be flat to up next quarter and 5) they estimate a $650-million impact due to COVID-19 in terms of revenue for the Apr-qtr. Overall, taking the full scope of comments we think the results were positive. One concern is likely the lack of visibility into the supply chain for the remainder of the year (unclear if new lock-downs occur related to COVID-19), however the Applied message was upbeat in our view.”
Taiwan Semiconductor Manufacturing Co Ltd. (TSM-N), a major supplier to Apple Inc, was down 4.4 per cent after it announced on Friday it will build a US$12-billion chip factory in Arizona, in what the company called a “strong partnership” with the U.S. government.
TSMC is the world’s most valuable semiconductor company with a market capitalization of US$255-billion that exceeds Intel Corp. (INTC-Q).
The move by the world’s biggest contract manufacturer of computer chips coincides with an effort by the administration of President Donald Trump to bring more foreign manufacturing to the United States.
The plant will create as many as 1,600 jobs and produce the most sophisticated 5 nanometer chips, TSMC said in a statement. The Taiwan company also has an older chip facility in Washington state.
TSMC said in a statement that construction on the facility would begin in 2021 and that it would be able to process up to 20,000 silicon wafers per month. Each wafer can contain thousands of individual chips.
Shares of Intel were down 1.3 per cent.
Chorus Aviation Inc. (CHR-T) fell back 7 per cent in the wake of saying it’s focused on cost cutting as it reports a first quarter loss as the COVID-19 outbreak significantly disrupts the airline industry.
The regional aviation company says it had a net loss of $17.3-million for the quarter ending March 31, compared with earnings of $33.45-million last year, as net income decreased $50.7-million due to a change in net unrealized foreign exchange losses.
Chorus says adjusted net income was $25-million, up from $19-million last year, as it started off the year in a good financial shape before the pandemic hit.
The company says it has now furloughed more than 3,000 employees, deferred and reduced capital expenditures, and reduced compensation for management and staff to trim costs.
Canaccord Genuity analyst Doug Taylor said: “Chorus reported March quarter results that we call largely in line with expectations but secondary to the fallout facing its airline lessees/customers. While there are significant operational changes occurring within the Air Canada CPA, the profit generated by this agreement and the related leases remains steady and Air Canada still has significant liquidity. On the other hand, third-party lessees continue to ask for more significant deferrals. Further, Chorus must now contend with three lessee airlines in various stages of administration that will test the company’s ability to remarket aircraft in an unprecedented environment. Fortunately, CHR has longterm remarketing windows (most are two years) and significant liquidity ($265-million), in addition to the ongoing cash flow from the CPA to buy time as it rides out the current turbulence and offer lessees the chance to catch-up.”
Abbott Laboratories (ABT-N) slipped 2.1 per cent after U.S. Food and Drug Administration said the company’s speedy coronavirus test could potentially be inaccurate, but can still be used to test patients.
The regulator said in a statement that early data about the Abbott ID Now test suggested it could produce potentially inaccurate results, particularly by failing to detect people who have the illness.
It added that it was reviewing data on the test’s accuracy and working with Abbott to find other ways to study the test. Abbott has agreed to conduct multiple studies of the test that will each include at least 150 COVID-19-positive patients in a variety of healthcare settings, the FDA said.
“This test can still be used and can correctly identify many positive cases in minutes. Negative results may need to be confirmed with a high-sensitivity authorized molecular test,” said Tim Stenzel, director of the office of in vitro diagnostics and radiological health at the FDA.
VF Corp. (VFC-N), the maker of Timberland boots and The North Face backpacks, warned on Friday that it expects current-quarter revenue to more than halve due to the coronavirus-induced store closures.
Shares fell 6.2 per cent, as the company also did not provide an outlook for its fiscal 2021, citing uncertainty over the duration and severity of the health crisis.
“Through the first 10 months of fiscal 2020 our business delivered results above our stated long-term growth objectives. Then the world changed for all of us as a result of COVID-19,” Chief Executive Officer Steve Rendle said in a statement.
VF said its suppliers, including third-party manufacturers, logistics providers and other vendors, have also been hit and that many of its facilities were operating at a reduced capacity.
With files from staff and wires