A roundup of some of the North American equities making moves in both directions today
On the rise
Guardian Capital Group Ltd. (GCG-T) rose 5.1 per cent after announcing a deal to acquire a 70-per-cent stake in Agincourt Management LLC, an investment management firm based in Richmond, Va.
The transaction is expected to close in Q4 2020 and add almost US$7-billion to Guardian’s assets under management.
Boston Pizza Royalties Income Fund (BPF.UN-T) jumped over 10 per cent after it reported system-wide gross sales of $129.8-million for the second quarter ended June 30, down 53.8 per cent versus the same period one year ago.
Franchise sales from royalty pool restaurants of $107.1-million were down 50.6 per cent year-over-year. Same-restaurant sales fell 53.5 per cent.
Total revenue of $5.7-million was in line with expectations and down from $11.5-million a year ago. Net income was $7.6-million or 35 cents per unit compared to net income of $9.2-million or 42 cents per unit a year ago.
Cineplex Inc. (CGX-T) gained 6.1 per cent after its chief executive said he is hoping that ending an agreement with a virtual reality golf company, films debuting in Canada before the U.S. and a slew of COVID-19 measures will right his business as it struggles with mounting costs for movie theatres that sat closed for months.
Ellis Jacob said Friday that his Toronto-based entertainment company had decided to mutually call off a deal with TopGolf that would have brought its sports complexes to Canada because it’s “simply not an opportune time” to invest in large projects.
He was simultaneously rejoicing at studios allowing the country to debut new releases like Spongebob: Sponge Out of Water, Unhinged and Christopher Nolan’s Tenet ahead of the U.S., which he hoped would draw audiences back to the movies.
“This is a very unusual occurrence,” Jacob told The Canadian Press. “Given what we have done in terms of keeping the guests safe during the pandemic, we got the international release dates and we are really proud of that.”
His remarks came as Cineplex reported a loss of $98.9-million or $1.56 per share in its second quarter, compared with a profit of $19.4-million or 31 cents per share in the same quarter last year.
Revenue for the quarter ended June 30 totalled $22-million, plummeting 90 per cent from $438.9 million, while its cash burn rate fluctuated between $15-million and $20-million every month.
The company was hurt when it was forced by governments to keep its theatres closed for months during COVID-19, resulting in temporary layoffs, slashed salaries and tussles with landlords over rent.
K-Bro Linen Inc. (KBL-T) was up 1.4 per cent in reaction to a significant second-quarter earnings beat.
After market close on Thursday, the Mississauga-based company reported revenue of $37.5-million, matching the Street’s expectation. However, EBITDA of $10.1-million topped the consensus projection of $3.1-million, due, in part, to benefits from the Canada Emergency Wage Subsidy.
In a research note, Raymond James analyst Michael Glen said: “K-Bro 2Q results were much better than expected. The stock has lagged quite significantly year-to-date, down 26.3 per cent overall versus the TSX down 3.1 per cent, and we believe the shares deserve to trade substantially better today given the 2Q results and outlook that illustrates a path to improving result.”
Applied Materials Inc. (AMAT-Q) rose 3.9 per cent as it forecast fourth-quarter revenue above analysts’ estimates following a rebound in demand for chip equipment and services.
Citi analyst Atif Malik said: “We view AMAT as a diversified equipment pick on growing installed base one-third of sales contribution and balanced WFE [wafer fab equipment] spend sales mix. Management commented that they see continued strength in foundry/logic and expect total WFE spend to be 55-per-cent-plus weighted towards foundry/logic in 2020 and 2021. Memory investments remain intact and that they are not expecting a spike or fall off through 2021. Specifically, F2Q was the low point for foundry and F4Q and F1Q are looking good. AMAT sales in memory are expected to be up half-over-half and expect an upward bias on the overall WFE. Domestic China investments were $6.5-billion in 2019 and are expected to grow to $9.5-billion this year. We view potential shift in manufacturing from Intel to TSMC as a modest positive for AMAT.”
CES Energy Solutions Corp. (CEU-T) rose 1 per cent despite releasing weaker-than-anticipated second-quarter results.
After the bell on Thursday, the Calgary-based company reported revenue and adjusted EBITDA, excluding CEWS, of $159-million and $2-million, respectively, falling short of the Street’s expectation of $169-million and $7-million.
ATB Capital Markets Tim Monachello said: “While CEU’s Q2/20 results were below our forecasts, we believe activity improvements and cost rationalizations across CEU’s business should mean Q2/20 is likely to mark the bottom in the current cycle both in terms of revenue and EBITDAS. Moreover, we increase our forward estimates slightly as we understand CEU has grown its U.S. drilling fluids market share to roughly 17 per cent in Q3, outstripping our previous forecasts, and as shut-in production has been brought back online more rapidly than our previous forecasts implied, which should foster stronger production chemicals contribution over the coming quarters. Still, CEU continues to manage significant pricing pressure from customers, and the path to a sustained recovery in drilling remains largely obscured past the near-term.”
Shares of German biotechnology firm CureVac BV (CVAC-Q) soared as much as 222 per cent after their Nasdaq debut on Friday, in the first stock market opening of a company developing a potential vaccine to combat the novel coronavirus.
The stock opened at US$44 per share and hit a session high of US$51.48 in early trade, compared with the initial public offering (IPO) price of US$16 per share.
CureVac Chief Executive Officer Franz-Werner Haas said with the listing, the company now has about a billion euros of cash on hand to develop its vaccine candidate and to expand manufacturing capacity in order to meet global demand.
“What we’ve seen so far is very promising, we are very confident.”
Haas said the company expects to put its vaccine on the market by mid-2021, adding CureVac is in talks with governments around the world for potential purchase agreements.
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Shares of Duck Creek Technologies Inc. (DCT-Q) soared on their Nasdaq debut on Friday, after the software company serving the property and casualty insurance market raised $405 million in its upsized initial public offering (IPO).
The stock jumped as much as 55 per cent from the IPO price of US$27 per share. It was still 45 per cent higher in mid-afternoon trading.
Boston-based Duck Creek, backed by private-equity firm Apax Partners, sold 15 million shares at US$27 apiece, above its target range of US$23 to US$25. The IPO valued Duck Creek at US$3.46-billion.
Duck Creek provides software-as-as-a-service (SaaS) solutions to carriers including AIG, Geico and Liberty Mutual.
The COVID-19 pandemic is pushing the insurance sector to rely heavily on technology to reach its customers, putting the focus on startups such as SoftBank-backed Lemonade Inc, which recently also priced its IPO well above the targeted range.
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On the decline
Apple Inc. (AAPL-Q) and Alphabet Inc. (GOOGL-Q) were down 0.1 per cent and 0.8 per cent, respectively, after removing popular video game Fortnite from their app stores for violating the in-app payment guidelines, prompting developer Epic Games to file federal antitrust lawsuits challenging their rules.
Apple and Google cited a direct payment feature rolled out on the Fortnite app earlier in the day as the violation.
Epic sued in U.S. court seeking no money from Apple or Google, but rather injunctions that would end many of the companies’ practices related to their app stores.
“Apple has become what it once railed against: the behemoth seeking to control markets, block competition, and stifle innovation. Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear,” Epic said in its lawsuit, filed in the Northern District of California.
Epic also attacked Apple on social media, launching a campaign with the hashtag #FreeFortnite, urging players to seek refunds from Apple if they lose access to the game, and creating a parody of Apple’s famous “1984” television ad.
Algonquin Power & Utilities Corp. (AQN-T) slipped 1.2 per cent with the release of weaker-than-anticipated second-quarter results on Thursday after the bell.
The company reported adjusted earnings per share of 9 US cents, falling 3 US cents below the consensus forecast on the Street.
Industrial Alliance Securities analyst Naji Baydoun said: “AQN’s Q2/20 results were below expectations, primarily as a result of lower demand within the Utilities business due to the ongoing COVID-19 pandemic. Despite the weaker-than-expected H1/20 performance, AQN has elected to maintain its 2020 financial guidance, and noted that it continues to expect to achieve expense reductions of US$15-million in 2020. At this time, we expect AQN to be near the lower end of its 2020 EPS financial guidance range.”
Chinese search engine giant Baidu Inc. (BIDU-Q) posted quarterly revenue a notch ahead of estimates, but its shares slid in extended trade after its streaming service iQIYI said it was being probed by the U.S. Securities and Exchange Commission.
Baidu’s second-quarter revenue fell 1 per cent to 26.0 billion yuan (US$3.8-billion) from the same period a year earlier but was better than an average analyst estimate of 25.7 billion yuan.
It forecast third-quarter revenue of 26.3 billion yuan to 28.7 billion yuan, in line with estimates and which compares with 28.0 billion yuan for the same quarter a year ago.
But the results were overshadowed by iQIYI’s disclosure of the investigation. Shares in iQIYI (IQ-Q), a Netflix-like video-streaming service, plunged 11.4 per cent while Baidu shares dropped 6.3 per cent. Both are listed on the Nasdaq.
DraftKings Inc. (DKNG-Q) fell 6 per cent in the wake of reporting a larger-than-anticipated second-quarter loss.
The Boston-based online gambling company announced a loss of US$161.4-million, or 55 US cents, versus the Street's estimate of 20 US cents. Revenue of US$70.9-million beat the consensus of US$66.4-million.
"In the second quarter, while several major sports leagues including the NBA, MLB and the NHL remained on hiatus due to COVID-19, the Company worked creatively to engage fans with new fantasy sports and betting products for NASCAR, golf, UFC, and European soccer," the company said. "As sporting events began to resume, the Company saw increased engagement with its sports-based product offerings, which contributed to sequential monthly revenue improvement during the second quarter. This positive momentum has accelerated with the return of MLB, the NBA, WNBA, the NHL, and MLS.
“The Company is introducing fiscal year 2020 pro forma revenue guidance of $500-million to $540-million which equates to year-over-year pro forma revenue growth of 22 per cent to 37 per cent in the second half of 2020. This guidance assumes that the professional sports calendar remains as currently contemplated and that DraftKings operates in the states in which it is currently live. DraftKings at this time does not anticipate an impact to its long-term plans due to COVID-19.”
With files from staff and wires
David Leeder