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A survey of North American equities heading in both directions

On the rise

Chipmaker Nvidia Corp. (NVDA-Q) briefly hit US$2-trillion in market value for the first time on Friday, riding on an insatiable demand for its chips that made the Silicon Valley firm the pioneer of the generative artificial intelligence boom.

The milestone followed another bumper revenue forecast from the chip designer that drove up its market value by US$277-billion on Thursday - Wall Street’s largest one-day gain on record.

Its rapid ascent in the past year has led analysts to draw parallels to the picks and shovels providers during the gold rush of 1800s as Nvidia’s chips are used by almost all generative AI players from chatGPT-maker OpenAI to Google.

That has helped the company vault from US$1-trillion to US$2-trillion market value in around eight months - the fastest among U.S. companies and in less than half the time it took tech giants Apple and Microsoft.

“For AI companies today - the leaders of the sector - what’s going to be binding for them is not going to be demand. It’s just going to be their capacity to answer the surging demand,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Nvidia’s shares were last trading 0.4% higher. They had risen as much as 4.9 per cent to a record high of US$823.9 earlier in the session, after a more than 16-per-cent jump on Thursday.

TransAlta Corp. (TA-T) gained over 5 per cent in the wake of reporting a loss attributable to common shareholders of $84-million compared with a loss of $163-million a year earlier.

The power utility says the loss amounted to 27 cents per diluted share for the quarter ended Dec. 31 compared with a loss of 61 cents per diluted share a year earlier.

Free cash flow per share for the quarter amounted to 39 cents, down from $1.17 in the fourth quarter of 2022.

Revenue totalled $624-million, down from $854-million in the last three months of 2022.

Production for the quarter was 5,783 gigawatt hours compared with 6,005 gigawatt hours a year earlier.

In its outlook for 2024, TransAlta says it expects adjusted earnings before interest, taxes, depreciation and amortization of $1.15 billion to $1.30 billion for the year and free cash flow of $1.47 to $1.96 per share.

“We view the print as directionally negative,” said ATB Capital Markets analyst Nate Heywood. “Q4/23 EBITDA of $289-million was down materially year-over-year from $548-million and a 12-per-cent miss to consensus of $328-million (ATB estimate: $336-million). The softer results were seen across most of the business, with the majority fueled by lower Alberta power pool pricing in Q4/23 as anticipated. The Hydro, Gas, and Marketing segments saw the largest year-over-year impacts and were the most significant contributors to the miss. TA continues to guide to 2024 Adjusted EBITDA guidance of $1.15b-$1.30-billion (ATBe: $1.28-billion/ consensus: $1.24-billion) and has not changed any of its initial assumptions released in November 2023. A beacon of the print, TA announced a 2024 share repurchase target of $150-million (2023 repurchases of $87-million), which accounts for 40 per cent of 2024 guided FCF of $450-$600-million (ATBe: $578-million). TA currently trades at a 2024 estimated EV/EBITDA multiple of sub-6 times, below peers in the space.”

Riding a jump in sales, Docebo Inc. (DCBO-T) surged 17.1 per cent with better-than-expected fourth-quarter results.

The Toronto-based online training software vendor reported adjusted earnings per share of 10 US cents, up from 5 US cents a year ago and 2 US cents higher than the Street’s projection. Revenue jumped 26.5 per cent to US$49.28-million, topping the consensus forecast of US$48.4-million.

Shares of Pembina Pipeline Corp. (PPL-T) increased 0.9 per cent with the release of stronger-than-expected fourth-quarter results and reaffirmation of its 2024 guidance.

After the bell on Thursday, the Calgary-based company reported a record adjusted EBITDA of $1.033-billion, up from $925-million during the same period a year ago and above the Street’s forecast of $1.017-billion. Driven by strength in its Marketing segment, its full-year EBITDA came in at $3.824-billion, near the top of its guidance of $3.75-$3.85=-billion. Pembina maintained its 2024 EBITDA projection of $3.725-$4.025-billion.

On Friday, Pembina said it will defer making a final investment decision on its proposed Cedar LNG project until mid-2024.

The Calgary-based pipeline company and its project partner, the Haisla First Nation, have been working to develop plans for a floating liquefied natural gas facility in Kitimat, B.C.

The project partners had previously said a decision to go ahead with the project could be made before the end of the first quarter, with onshore construction work starting as soon as the second quarter of this year.

But Pembina now says there a number of issues that must be resolved before a final decision can be made, including ongoing negotiations for commercial offtake, agreements, the obtaining of certain third-party consents, and project financing.

“Q4/23 results support our thesis that PPL is one of the best positioned in our coverage to benefit from rising WCSB volumes,” said BMO analyst Ben Pham. “EBITDA results beat by 2 per cent with full-year setting a new high watermark despite Alberta wildfires earlier in the year. PPL also secured new contracts to expand gas processing and ethane movement, reinforcing the value of its integrated network. With shares still offering good value (10 times EBITDA vs. peers 10.5 times), we maintain Outperform rating.”

Shares of Intuitive Machines (LUNR-Q) soared on Friday as the company became the first private firm to land a spacecraft on the moon, in what could be a watershed moment for the space industry.

The landing, the first U.S. touchdown on the lunar surface in more than half a century, put the company on track to waltz past US$1-billion in market value, based on its premarket share price.

It also pushed up shares of other space companies, with Rocket Lab (RKLB-Q), Virgin Galactic (SPCE-N) and Astra Space (ASTR-Q) gaining.

Texas-based Intuitive Machines’ lunar lander, dubbed “Odysseus,” touched down at the Malapert A crater, about 300 kilometers from the moon’s south pole on Thursday.

The lander was sent on its way to the moon last Thursday using a Falcon 9 rocket launched by Elon Musk’s company SpaceX from NASA’s Kennedy Space Center in Cape Canaveral in Florida.

The landing represented the first controlled descent to the lunar surface by a U.S. spacecraft since Apollo 17 in 1972, when NASA’s last crewed moon mission landed there with astronauts Gene Cernan and Harrison Schmitt.

Shares of Jack Dorsey-led Block (SQ-N) jumped on Friday, following gains from the previous session as cost cuts helped the payments firm forecast first-quarter core earnings above Wall Street expectations.

The stock was on track to add nearly US$7-billion to the company’s market value if gains hold.

Block has been looking to lower costs and drive “profitable growth” in the business by trimming headcount and reducing its real estate footprint. The company said on Thursday it plans to cut 112 jobs in March.

“Strong execution and urgency in cost optimization are appreciated, while messaging continues to center on more focused, profitable growth,” brokerage TD Cowen said on Friday.

Block forecast adjusted core earnings between US$570-million and US$590-million for the first quarter on Thursday, compared to analysts’ estimates of US$511.8-million, according to LSEG data.

On the decline

Onex Corp. (ONEX-T) was lower after reporting private equity investments gained 5 per cent in the fourth quarter last year but profit dipped as returns from asset management declined.

Onex reported profit of US$373-million, or US$4.81 per share, in the three months that ended Dec. 31. That compared with US$435-million, or US$5.32 per share, in the same quarter in 2022.

For the full year in 2023, profit was US$529-million, up from US$235-milion a year earlier.

The Toronto-based private equity firm’s investing capital increased to US$8.4-billion, or US$107.82 per share – up 4 per cent in the quarter and 11 per cent over the past year.

But its assets under management that generate fees fell to US$33.7-billion, from US$34.2-billion three months earlier. Clients have been withdrawing funds from Onex’s private wealth division, which it chose to wind down last year. Onex offset some of that decline by attracting new fee-generating assets to its collateralized loan obligation business, which allows clients to invest in pools of debt.

Onex has been in a turnaround phase under chief executive officer Bobby Le Blanc, who was appointed CEO last year after founder Gerry Schwartz stepped down, but stayed on as board chair.

Mr. Le Blanc has focused on selling select assets to return cash to investors, cutting costs and making new private equity investments. After he paused fundraising on its latest flagship private equity fund, he set new targets for the company, tempering investors’ expectations in the near term.

- James Bradshaw

Colliers International Group Inc. (CIGI-T) dropped 5.7 per cent after announcing a US$300-billion bought deal public offering.

After the bell on Thursday, the Toronto-based announced an agreement with a syndicate of underwriters, led by BMO Capital Markets and J.P. Morgan, to buy 2.48 million subordinate voting shares at a price of US$121.00 each.

The net proceeds will be used to repay balances outstanding on Colliers’ credit facility and are “intended to create additional capacity to fund potential future acquisition opportunities and growth initiatives, and for general corporate purposes.”

Halifax’s Chorus Aviation Inc. (CHR-T) plummeted 6.6 per cent after it reported its fourth-quarter profit fell 20 per cent compared with a year ago as its revenue also edged lower.

The company says it earned net income of $36.6-million for the quarter ended Dec. 31, down from $45.9-million a year earlier.

Operating revenue totalled $421.5-million, down from $439.8-million in the last three months of 2022.

On an adjusted basis, Chorus says it earned five cents per share in its fourth quarter compared with an adjusted profit of 11 cents per share a year earlier.

The company says its leverage ratio — net debt divided by its trailing 12-month adjusted earnings before interest, taxes, depreciation and amortization — ended the year at 3.6 compared with 4.4 at the end of 2022.

Chorus leases planes across the globe and provides regional service for Air Canada through its Jazz Aviation subsidiary.

Centerra Gold Inc. (CG-T) fell 1.2 per cent despite topping the Street’s profit expectation for the fourth quarter of 2023.

The Toronto-based miner reported adjusted earnings per share of 28 cents, up from a loss of 6 cents a year ago and 3 cents higher than the consensus forecast from analysts. Revenue jumped 63.2 per cent to $339.96-million.

Calling the release “positive,” Canaccord Genuity analyst Jeremy Hoy said: “CG’s Q4/23 costs and financials slightly beat our estimates and full-year 2023 costs were in line with annual guidance. We note that the company had pre-released production, 2024 guidance, and the YE2023 reserve and resource update. We like CG for its solid operating cash flow base from its existing operations ($180-$270-million per year through 2027) and healthy balance sheet ($1-billion in liquidity), as well as the new management team’s strong technical credentials. Key questions for us going forward are: 1) What happens to the Molybdenum Business Unit (MBU)? The company is currently running a strategic process for the MBU and we believe it is perceived by the market as a mismatch in the portfolio. 2) What additional value can be unlocked at Mt. Milligan? See comment on Royal Gold agreement below. 3) Noting the relatively flat production profile, what does the company do with its sizeable balance sheet and cash flow going forward?”

Warner Bros Discovery (WBD-Q) slipped on reporting a bigger-than-expected quarterly loss as the media conglomerate battled the fallout of the twin Hollywood strikes on content generation.

Studios are still facing delays in the release of new content, especially given the lengthy post-production process, even though the strikes by writers and actors ended in September and November, respectively.

The company, forged by the union of WarnerMedia and Discovery, reported overall fourth-quarter revenue of US$10.28-billion, missing analysts’ average estimate of US$10.35-billion, according to LSEG data.

Excluding items, it lost 16 US cents per share, larger than expectations for a loss of 7 US cents.

Advertising revenue at its networks segment declined 12 per cent to US$1.95-billion.

Customers’ shift to streaming from linear TV has shackled the company as it seeks to boost growth at its streaming services while staving off declines at its cable business.

Warner Bros Discovery said it had 97.7 million global streaming customers at the end of the fourth quarter, including 1.3 million subscribers from its acquisition of BluTV. That compared with 95.1 million in the prior quarter.

The company is pinning its hopes on the release of the second installment of sci-fi epic Dune, featuring Timothee Chalamet and Zendaya. The release was delayed from November due to the Hollywood strikes.

Pink-themed movie phenomenon Barbie had helped the company smash box office numbers last year with more than US$1-billion in ticket sales worldwide.

The results come when the U.S. entertainment industry is abuzz with fresh consolidation moves. Reuters reported in January, citing a source, that Skydance Media CEO David Ellison was exploring an all-cash bid to acquire entertainment company Paramount Global’s parent, National Amusements.

That followed another Reuters report in December that Warner Bros Discovery CEO David Zaslav and Paramount top boss Bob Bakish had met to discuss a potential deal.

With files from staff and wires

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 21/05/24 4:00pm EDT.

SymbolName% changeLast
ASTR-Q
Astra Space Inc Cl. A
-0.96%0.6517
SQ-N
Block Inc
-2.76%71.51
CG-T
Centerra Gold Inc
+4.17%10.24
CHR-T
Chorus Aviation Inc
+0.45%2.22
CIGI-T
Colliers International Group Inc
-1.08%155.99
DCBO-T
Docebo Inc
-1.53%50.08
LUNR-Q
Intuitive Machines Inc
-1.35%5.12
NVDA-Q
Nvidia Corp
+0.64%953.86
ONEX-T
Onex Corp
+0.62%96.95
PPL-T
Pembina Pipeline Corp
+0.72%50.66
RKLB-Q
Rocket Lab USA Inc
+1.36%4.46
TA-T
Transalta Corp
-0.1%9.82
WBD-Q
Discovery Inc Series A
-2.47%7.89
SPCE-N
Virgin Galactic Holdings Inc
-2.37%0.97

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