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A roundup of some of the North American equities making moves in both directions today

On the rise

Shares of Apple Inc. (AAPL-Q) jumped 10.5 per cent in the wake of delivering blowout quarterly results after the bell on Thursday, reporting revenue gains across every category and in every geography as consumers working and learning from home during the COVID-19 pandemic turned to its products and services.

The report topped Wall Street expectations, with even long-overshadowed categories like iPads and Macs getting a boost.

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The fiscal third-quarter results, which included iPhone sales some US$4-billion above analyst expectations, came on the same day that U.S. gross domestic product collapsed at a 32.9-per-cent annualized rate last quarter, the nation’s worst economic performance since the Great Depression.

Apple Chief Financial Officer Luca Maestri also confirmed supply chain rumblings that the new lineup of iPhones, usually released in late September, would face delays of a few weeks.

But executives predicted continued strong performance from the company’s products.

With 60 per cent of sales coming from international markets, the Cupertino, California-based company posted iPhone revenues of US$26.42-billion, US$4-billion above analyst expectations, according to IBES data from Refinitiv.

See also: Apple’s stock split may not be good for the Dow

Facebook Inc. (FB-Q) beat analysts’ estimates for quarterly revenue on Thursday, as businesses used its digital advertising tools to tap a surge in online traffic during the coronavirus pandemic even as they slashed marketing budgets elsewhere.

Shares of the world’s biggest social network jumped 8.2 per cent.

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Revenue growth was its slowest ever as a public company, reported at 11 per cent, although it beat analysts’ expectations that it would sink to 3 per cent, according to IBES data from Refinitiv.

Ad sales, which contribute nearly all of Facebook’s revenue, rose 10 per cent to US$18.3-billion in the second quarter. Monthly active users rose to 2.7 billion, ahead of estimates of 2.6 billion. Inc. (AMZN-Q) on Thursday posted the biggest profit in its 26-year history as online sales and its lucrative business supporting third-party merchants surged during the coronavirus pandemic.

Shares of Amazon, the world’s largest online retailer, rose 3.7 per cent.

While rival brick-and-mortar retailers have had to shut stores during government-imposed lockdowns, Amazon hired 175,000 people in recent months and saw demand for its services soar. The company said revenue jumped 40 per cent from a year earlier to US$88.9-billion.

Amazon had forecast it might lose money in the just-ended second quarter because it expected to spend some US$4-billion on protective equipment for staff and other expenses related to COVID-19. It did just that - and still earned US$5.2-billion - double its net income from a year prior.

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Jeff Bezos, who founded the company in July 1994 and is the world’s richest person, said in a statement, “This was another highly unusual quarter.”

Amazon’s shares have risen by more than 60 per cent this year, adding to the wealth of Mr. Bezos, its biggest stockholder. The S&P 500 is virtually flat.

See also: U.S. lawmakers appear ready to rein in Amazon, Google, Apple and Facebook

Merck & Co Inc. (MRK-N) was up 1.7 per cent in the wake of posting a higher-than-expected quarterly profit and raising its full-year earnings forecast on resilient demand for its blockbuster cancer therapy Keytruda during the COVID-19 pandemic, sending its shares up 3 per cent.

The company said it was planning to begin human studies of an experimental coronavirus vaccine it acquired through its acquisition of Themis Bioscience in the third quarter.

It has lagged some rivals that have already begun late-stage trials with hopes of curtailing a pandemic that has hammered economies around the globe.

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Merck is also developing a separate vaccine for the coronavirus in collaboration with research non-profit IAVI and developing an antiviral therapy for COVID-19 in a mid-stage study along with Ridgeback Bio.

Quarterly sales of Keytruda, Merck’s key growth driver, rose nearly 29 per cent to US$3.39-billion, beating the average estimate of US$3.13-billion, according to Refinitiv data.

Electronic Arts Inc. (EA-Q) was 2.2 per cent higher after it raised its full-year forecast for adjusted revenue after beating quarterly estimates, encouraged by strong player engagement and increased videogame sales to stuck-at-home gamers.

EA, popular for titles like Star Wars Jedi: Fallen Order and Battlefield, raised its full year adjusted revenue outlook to about US$5.95-billion from about US$5.55-billion, topping analysts’ estimates of US$5.61-billion, according to Refinitiv IBES data.

EA earns a bigger chunk of its sales from live services, which include in-game purchases and “EA Access”, a subscription-based online service, among other items.

Revenue from live services was up by US$416-million in the quarter from a year earlier, primarily driven by FIFA and Sims, a popular life simulation videogame, Chief Financial Officer Blake Jorgensen told Reuters.

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Exxon Mobil Corp. (XOM-N) finished 0.5 per cent higher in response to reporting a US$1.1-billion loss for the second quarter on Friday, the first back-to-back quarterly loss for the U.S. oil giant in at least 36 years.

Exxon stood out among its supermajor peers for not taking a large writedown on the value of its assets as the industry outlook darkens on the future of oil and gas prices.

Chevron Corp, Total, Royal Dutch Shell, and Eni wrote down billions of dollars in assets. BP has signaled an up to US$17.5-billion hit.

The COVID-19 pandemic slashed oil prices, sending Exxon’s oil and gas production business to a loss. Its refining businesses was hit by a fall in demand, but an improvement in inventory valuations pushed overall refining profits into the black by nearly US$1-billion.

The U.S. oil major reported a loss of US$1.08-billion, or 26 US cents per share, in the three months ended June 30, compared with a profit of US$3.13-billion, or 73 US cents per share, a year earlier.

TransAlta Corp. (TA-T) gained 0.2 per cent lower after it reported second-quarter results that fell short of the Street’s forecast.

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Before the bell, the Calgary-based company announced revenue of $437-million versus $497-million a year ago. Analysts were expecting revenue of $409-million.

Its net loss attributable to common shareholders for the three months ended June 30 was $60-million compared to nil in the same period in the prior year. EBITDA of $217-million compared to $215-million in the same period of 2019.

Free cash flow, which the company said is one of its key financial metrics, totaled $91-million versus $49-million a year ago.

ATB Capital Markets analyst Nate Heywood said: “We view the announcement as neutral given the Company reported Adjusted EBITDA in line with our expectation and consensus. Overall, the Company realized benefits from renewable facilities placed into service in late 2019 and strong marketing performance, partially offset by headwinds related to Canadian power prices in Alberta and Ontario.”

On the decline

Air Canada (AC-T) dipped 6.1 per cent after announcing it lost $1.7-billion in the second quarter, as the pandemic and related travel bans forced Canada’s largest airline to ground planes, lay off thousands and slash passenger capacity by 92 per cent.

Revenue fell by 89 per cent to $527-million in the three months ending June 30, from $4.7-billion in the year-ago period, Air Canada said on Friday morning.

The carrier said it will burn through $15-million to $17-million in cash every day in the third quarter, eroding its liquidity that totaled $9-billion on June 30. Seat capacity will be reduced by 80 per cent, compared with the same period in 2019. Air Canada has raised $5.5-billion amid the pandemic, which has brought the global airline industry to the brink of failure.

Air Canada lost $1.7-billion, or $6.44 a share, compared with a profit of $343-million ($1.26) in the second quarter of 2019.

- Eric Atkins

Telus Corp. (T-T) slid 0.6 per cent after it saw its second-quarter income decline by 39 per cent to $315-million as the pandemic led to lower roaming revenues and overage charges, higher bad debt expenses and temporary store closures.

The company said its net income, which was down from $520-million a year ago, was also impacted by higher income tax and financing costs and increased depreciation and amortization.

The earnings amounted to 23 cents per share, compared to 43 cents per share a year ago.

On an adjusted basis, Telus earned 25 cents per share, one cent below the consensus analyst estimate of 26 cents per share from S&P Capital IQ.

Telus reported $3.73-billion in quarterly revenue, up nearly 4 per cent from a year ago and above the consensus analyst estimate of $3.53-billion.

- Alexandra Posadzki

Imperial Oil Ltd. (IMO-T) declined 4.8 per cent in the wake of posting a second-straight quarterly loss on Friday, hit by lower crude prices and refining margins as the COVID-19 pandemic dented demand for fuel and related products.

The coronavirus outbreak led to the grounding of flights and brought economies to a standstill, hurting demand for fuel and forcing producers to implement widespread output cuts to curb oversupply after oil prices collapsed this year.

Imperial, which is majority owned by Exxon Mobil Corp , said its refinery throughput averaged 278,000 barrels per day, 19 per cent lower than last year, with overall utilization at 66 per cent in the quarter.

Prices for the company’s U.S. crude fell about 53.5 per cent to $27.83 per barrel, while Canadian crude prices dropped about 66 per cent from year-ago levels to $16.73 per barrel.

The company said it expects lower realized prices for its products to result in substantially lower earnings and cash generated from operations than in 2019, unless conditions improve significantly in the latter half of the year.

Imperial’s quarterly average production for the quarter fell 13.3 per cent to 347,000 barrels of oil equivalent per day (boepd) due to scheduled shutdowns of its Kearl and Syncrude oil sands deposits to balance near-term output with poor demand.

The Calgary-based company posted a loss of $526-million, or 72 cents per share, for the second quarter ended June 30, compared with a profit of $1.21-billion, or $1.57 per share, last year.

Raymond James analyst Chris Cox said: “The headline miss certainly stands out relative to the rest of the group, and we will need to dig into full financials to get a better sense of the key drivers of the impact here. That said, we do believe a material part of the miss can likely be explained away by the surprise cash taxes in the quarter and a weak quarter in the Downstream, amplified by some of the turnaround activity in the quarter. With clear signs of meaningful demand recovery, we believe it would be prudent for investors to look past the acute weakness in 2Q20 results.”

SNV-Lavalin Group Inc. (SNC-T) lost 9 per cent in the wake of the premarket release of its second-quarter results.

SNC is restructuring its resources business with a goal of returning the segment to profitability next year while its overall operations lost less money in the second quarter.

The Montreal-based company says it will focus only on profitable parts of the resources business in nine countries in the Americas and Middle East with the number of segment employees shrinking 60 per cent to 6,000 by the end of 2021.

SNC announced the move as it reported a net loss of $111.6-million or 64 cents per diluted share for the three months ended June 30, compared with a loss of $2.12-billion or $12.07 per share a year earlier. This quarter’s loss includes $47.3-million of restructuring costs mainly related to the resources services transformation.

In a research note, National Bank Financial analyst Maxim Sytchev said: “Messy again but good parts of the business did well, Resources will be slimmed down and the balance sheet is in good shape. We can’t recall a clean quarter from the company since a couple of showings in 2018. Investors who believe there is value, anchor their expectations to Engineering Services (EPDM, infra services and nuclear). That division did well in the quarter. Resources is finally being slimmed down as there are no buyers in this market but at least we can turn the page on the Kentz/top-of-the-cycle acquisition. The challenge with the story is that “next quarter or next year” should be better and current results are not representative of the earnings power; at some point that will be true and it looks like H2/20 is starting to get there (with some LSTK risk remaining, of course, as these contracts still have up to 2023 to fully roll off; note that Resources LSTK have three quarters to go for 100-per-cent completion).”

Ford Motor Co. (F-N) declined 2.1 per cent after it said late Thursday it expects a full-year loss but added it should have ample cash on hand throughout the rest of 2020, even if global demand falls further or the COVID-19 pandemic forces more shutdowns of vehicle assembly plants.

The No. 2 U.S. automaker also said that on July 27 it repaid US$7.7-billion of an outstanding US$15.4-billion on its revolving credit facilities, and extended US$4.8-billion of its three-year revolving credit lines.

Ford’s comments came as the company posted a quarterly profit thanks to an investment by Volkswagen AG in its self-driving Argo AI unit, more than offsetting a loss caused by a coronavirus-induced production shutdown.

“The strong execution enabled us to deliver much better financial results than we expected just three months ago,” Chief Executive Jim Hackett said on a conference call with analysts.

Google’s ad sales have recovered since plummeting in March during the coronavirus pandemic, parent Alphabet Inc said on Thursday, easing concerns about its first quarterly sales slide in its 16 years as a public company.

Alphabet (GOOGL-Q) shares were down 3.3 per cent, after it said revenue fell 2 per cent in the second quarter, less than analysts’ estimate of a 4-per-cent decline.

Alphabet, whose ad sales account for about 78 per cent of its revenue, has struggled during past economic slowdowns, as marketing is often the first budget item to get slashed.

But Google and its online advertising rivals Facebook Inc and Inc on Thursday all reported better results in the pandemic than in past recessions.

With its mostly free tools for web browsing, video watching and teleconferencing, Google has become a larger part of many consumers’ lives as lockdown orders force people to rely on the internet for work and entertainment. In turn, the internet has become more attractive to advertisers than TV, radio and other avenues.

“We saw the early signs of stabilization as users returned to commercial activity online,” Alphabet Chief Executive Sundar Pichai told analysts during a conference call on Thursday.

Under Armour Inc. (UAA-N) was down 8.2 per cent despite reporting a smaller-than-expected quarterly loss on Friday, as it sold more merchandise online with customers staying at home during the coronavirus lockdowns.

Under Armour, which sells merchandise to several U.S. department stores that were closed during the lockdowns, said gross margin rose 280 basis points to 49.3 per cent in the reported quarter, helped by lower sales to off-price channels.

Even as stores were temporarily shut, activewear companies such as Under Armour have been able to benefit from demand for home workout apparel and equipment as people alter their exercising schedules during the lockdowns.

“While we performed better than expected, we still experienced a significant decline in revenue across all markets,” Chief Executive Officer Patrik Frisk said.

Caterpillar Inc. (CAT-N)) dipped 2.9 per cent in response to reporting a US$1.1-billion loss for the second quarter on Friday, the first back-to-back quarterly loss for the U.S. oil giant in at least 36 years.

The heavy equipment maker’s profit of 84 US cents per share topped the 68 US cents per share expected by analysts, Refinitiv Eikon data showed.

Revenue fell 31 per cent to US$10-billion with sales declining across all regions and in its three primary segments of construction, mining, and energy and transportation.

The manufacturer, a bellwether for economic activity, said its financial results would be impacted by continued global economic uncertainty.

As a result, it declined to reinstate its earnings guidance which was withdrawn in late March. Share repurchases will also remain suspended this year.

However, it paid shareholders US$600-million in dividends.

Chevron Corp. (CVX-N) fell 2.6 per cent after it reported an US$8.3-billion loss on asset writedowns from plummeting fuel prices, a forced exit from Venezuela and expenses tied to thousands of jobs cuts.

Multibillion-dollar asset writedowns have become a prominent part of second-quarter energy results, as a global oil glut emerged as the COVID-19 pandemic cut fuel demand. Chevron rivals Total, Royal Dutch Shell, and Eni each wrote down billions of dollars in assets. BP has signaled an up to US$17.5-billion hit.

Chevron wrote down its oil and gas production properties by US$5.6-billion, including its entire investment in crisis-ravaged Venezuela, where it was the last major U.S. oil company still operating until ordered to wind down business by the Trump Administration.

The loss also includes US$1-billion to cover severance pay for up to 6,700 of its 45,000-person staff to leave their jobs in a global restructuring.

The writedowns pushed Chevron’s loss to US$8.27- billion, or US$4.44 a share, compared to a profit of US$4.3-billion, or US$2.27 a share, a year ago. Adjusted loss was US$3-billion, or US$1.59 per share, compared to a profit of US$3.4-billion, or US$1.77 per share, last year, it reported.

U.S. refiner Phillips 66 (PSX-N) lost 1.7 per cent after it reported a quarterly loss compared to a year-ago profit, as coronavirus-led restrictions on businesses and travel destroyed fuel demand and hurt margins.

Fuel demand has plunged as countries around the world limit travel to stem the spread of the coronavirus. This led to a plunge in crude prices, which touched historic lows in April.

Refining margins for the fourth largest U.S. refiner slumped 77 per cent to US$2.60 per barrel in the second quarter and the company posted a loss of US$878-million in the refining segment, its biggest, compared with a US$983-million profit a year earlier.

“Our second-quarter results reflect the disruption in refined product demand from COVID-19 and weak margins across our businesses,” said Chief Executive Officer Greg Garland in a statement.

Gilead Sciences Inc. (GILD-Q) was lower by 3.9 per cent after it posted worse-than-expected quarterly results after market on Thursday, but raised its 2020 sales forecast to include revenue from its antiviral drug remdesivir, one of the only treatments shown to help COVID-19 patients.

Gilead said it expects total 2020 sales of US$23-billion to US$25-billion, up from its previous range of US$21.8-billion to US$22.2-billion.

“We think this implies up to $1 billion to $3 billion of remdesivir, ... a positive that was not expected at the start of the year,” said Jefferies analyst Michael Yee.

Gilead’s second-quarter sales fell nearly 10 per cent from a year earlier to US$5.1-billion, short of the average analyst estimate of US$5.3-billion, according to Refinitiv.

The results reflected weak sales of Gilead’s hepatitis C drugs and flagship HIV treatments during coronavirus pandemic lockdowns. The company said it expects its HIV drugs and hepatitis C sales to begin regaining momentum in the current third quarter.

Adjusted earnings for the second quarter of US$1.11 per share fell short of analysts’ average estimate by 34 US cents.

See also: U.S. drugmaker earnings heat up this week with spotlight on vaccine news

With files from staff and wires

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