A roundup of some of the North American equities making moves in both directions today
On the rise
New Look Vision Group Inc. (BCI-T) jumped with the premarket announcement that an investor group, including the Caisse de depot et placement du Quebec, has signed an agreement to buy it in a deal that values the company at about $800-million.
Under the agreement, the group, which also includes private equity firm FFL Partners and the Dr. H. Doug Barnes Family, will pay $50 in cash per share for New Look.
Shares in the company closed at $39.63 on the Toronto Stock Exchange on Thursday.
New Look sells prescription and non-prescription glasses, contact lenses and sunglasses.
It has a network of 406 stores under several banners including New Look Eyewear, Vogue Optical, Greiche & Scaff, Iris and Edward Beiner.
The deal, which requires shareholder and other approvals, is expected to close in the first half of this year.
The Montreal-based maker of sporting goods, products for young children and home furniture says the sale is part of a strategic move to co-develop new children’s products with a diverse supplier base.
The juvenile products manufacturing facility in Zhongshan will be sold to Guangdong Roadmate Group Co., Ltd. for gross proceeds of about US$51-million. However, it expects to incur a non-cash loss of about US$8-million.
Dorel will maintain its second manufacturing location in Huangshi as well as its product sourcing and quality control organizations in China that service all three of Dorel’s business segments.
The transaction does not include Dorel’s domestic juvenile sales operation based in Shanghai that was acquired along with the manufacturing facility in 2014 as part of a deal valued at US$120-million.
New Gold Inc. (NGD-T) was higher after announcing it has agreed to purchase 154,940,153 common shares of Harte Gold Corp. (HRT-T) in a private placement for total consideration of approximately $24.8-million.
The transaction provides a 14.9-per-cent strategic interest in Harte Gold’s issued and outstanding common shares.
In a research note, Scotia Capital analyst Trevor Turnbull said: “We are not surprised by the investment as we believe it makes sense in terms of size and potential for New Gold. We model New Gold’s existing mine lives at about 8 - 9 years. The company’s balance sheet is sound and we forecast significant free cash flow next year and beyond.”
U.S. delivery firm FedEx Corp. (FDX-N) jumped in the wake of saying late Thursday its quarterly profit jumped more than expected on higher prices and surging volume from pandemic-fueled e-commerce deliveries during the holiday shipping season.
FedEx shares have more than doubled in price since a year ago, when the pandemic forced government officials to shutter businesses and issue stay-at-home orders.
They rose higher after founder and Chief Executive Frederick Smith said he expected demand for e-commerce and international express services to “remain very high for the foreseeable future.”
Fiscal third-quarter adjusted net income at the Memphis-based company soared 153 per cent from a year earlier to US$939-million, or US$3.47 per share, beating analyst expectations of US$3.23 per share, according to Refinitiv data.
Revenue for the quarter ended Feb. 28 grew 23 per cent to US$21.5-billion, boosted by a half billion holiday package deliveries and COVID-19 vaccines shipments.
Tesla Inc. (TSLA-Q) reversed course and closed higher despite reports the Chinese military has banned it cars from entering military housing complexes, citing security concerns over the cameras installed on the vehicles.
The order issued by the military advises Tesla owners to park their cars outside of military property, Bloomberg had earlier reported, adding that the ban was notified to residents of military housing this week.
Separately, the Wall Street Journal reported that China’s government was restricting the use of the company’s cars by personnel at military, state-owned enterprises in sensitive industries and key agencies, as they could be a source of national security leaks.
In a research notes, Wedbush analyst Dan Ives said: “Given Tesla’s market share within China is increasing (as seen in the month of February) and EV demand is skyrocketing within this key region this move is not a complete shocker, although it clearly indicates ‘big brother is watching’ the situation closely. Tesla’s massive Giga footprint remains a major strategic advantage vs. other EV players (domestic and foreign) as we believe Tesla has potential to be on a 300k run rate of demand in China by the second half of this year. We will watching this situation closely as China remains the linchpin to the bull case thesis around Tesla for the coming years with this latest news a ‘contained situation’ in our opinion for now.”
On the decline
Nike Inc. (NKE-N) dipped after it quarterly sales missed estimates due to shipping issues and a pandemic-related slump at brick-and-mortar stores, and investors were disappointed by the world’s biggest athletic shoe maker’s full-year revenue forecast.
Nike forecast “low-to-mid-teens” full-year revenue growth, falling just short of the 15.9-per-cent increase in sales that analysts were expecting, according to IBES data from Refinitiv.
“I think the expectations for Nike into the call were very high with many analysts upping revenue and earnings expectations into the quarter,” said Ivan Feinseth, head of investment at Nike shareholder Tigress Financial Partners.
Revenue rose to US$10.36-billion from US$10.1-billion, while analysts on average had expected US$11.02-billion. The company said revenue from North America fell 11 per cent on a currency-neutral basis because container shortages and U.S. port congestion held up inventory by more than three weeks.
“We expect to capture this delayed revenue in the fourth quarter,” Nike Chief Financial Officer Matthew Friend said.
U.S. container-freight traffic has slowed significantly in recent months due to COVID-19 outbreaks among dockworkers and safety restrictions aimed at stemming the spread of the virus. At the same time, ports are dealing with a cargo surge due to pandemic-led demand for bulk products.
Nike’s net income nonetheless climbed to US$1.45-billion, or 90 US cents per share, in the third quarter ended Feb. 28, from US$847-million, or 53 US cents per share, a year earlier. Analysts were expecting earnings per share of 76 US cents.
Johnson & Johnson (JNJ-N) erased gains late in the session and finished lower after its Janssen Pharmaceutical Co. unit said the U.S. Food and Drug Administration has approved its multiple sclerosis (MS) treatment, Ponvory,
The FDA approved Ponvory as a daily oral drug to treat relapsing forms of multiple sclerosis, a debilitating neurological condition in which the immune system eats away at the protective covering of nerves.
The approval was based on data from a two-year late-stage study where Ponvory demonstrated superior efficacy in significantly reducing annual relapses by about 30 per cent compared to Sanofi’s approved MS drug Aubagio, the company said.
Visa Inc. (V-N) plummeted after the Wall Street Journal reported on Friday the U.S. Department of Justice is investigating whether it is engaging in anticompetitive practices in the debit-card market.
The department’s antitrust division has been probing if Visa limited merchants’ ability to route debit-card transactions over card networks that are often less expensive, the WSJ reported.
Many of the department’s questions are focused on online debit-card transactions, but investigators are looking into in-store issues as well, according to the report.
With files from staff and wires