A roundup of some of the North American equities making moves in both directions today
On the rise
Canopy Growth Corp. (WEED-T) soared 7.4 per cent after it reported a smaller-than-expected quarterly loss on Monday, as restructuring helped it rein in costs and coronavirus-related lockdowns lifted demand for cannabis products.
Sales at Canopy and other cannabis companies rose as customers stockpiled ahead of coronavirus-led lockdowns, with so-called ‘cannabis 2.0’ products, including chocolates, beverages, vapes, seeing the heaviest demand.
“We grew our revenue year-over-year and are seeing market share improvement, notably achieving number one market share in cannabis-infused beverages in the Canadian market,” Chief Executive David Klein said in a statement.
Canopy and many of its Canadian peers launched company-wide restructurings at the start of this year as investors shunned the cannabis industry’s extravagance and lack of profits.
Mr. Klein said the company has cut its headcount by over 18 per cent since the beginning of 2020, reduced expense and cash burn in the first quarter and will be “further optimizing” operations.
The Ontario-based company’s revenue rose to $119.1-million in the quarter ended June 30, beating analyst’s expectations of $93.5-million, according to Refinitiv IBES data.
On an adjusted basis, the company’s loss of 25 cents per share was much smaller than loss estimates of 44 cents.
Berkshire Hathaway Inc. (BRK-B-N) rose 1.5 per cent after Warren Buffett’s company reported an 87-per-cent jump in its second-quarter profit as the paper value of its investment portfolio increased with the stock market, but it took a roughly US$10-billion writedown on the value of its aircraft parts manufacturing business because of the economic impact of the coronavirus pandemic.
Berkshire said Saturday that it earned US$26.3-billion, or US$16,314 per Class A share, during the second quarter. That’s up from US$14.1-billion, or US$8,608 per share, a year ago.
Seattle-based drug developer Omeros Corp. (OMER-Q) surged 51.2 per cent in the wake of reporting positive results from a six-patient study of its investigational treatment for acute respiratory distress syndrome caused by COVID-19.
Omeros said all the six patients, who needed mechanical ventilation before treatment, recovered and were discharged from hospital.
Acute respiratory distress syndrome, or ARDS, causes fluid to collect in the lungs, depriving organs of oxygen. COVID-19 patients with ARDS often require intensive care.
Omeros’ treatment, narsoplimab, is a human monoclonal antibody that recognizes and locks onto a virus, preventing the infection from spreading.
Canadian Natural Resources Ltd. (CNQ-T) added 1.4 per cent after it said on Monday it will buy smaller rival Painted Pony Energy Ltd. (PONY-T) for about $461-million including debt, as Canada’s biggest oil and gas producer seeks to expand its Western Canada acreage.
Shares of Painted Pony jumped 15.3 per cent.
Natural gas prices have come under pressure from reduced consumption as efforts to tackle the COVID-19 pandemic resulted in a drop in manufacturing activities, while canceled LNG exports have led to high natural gas inventories.
“This transaction also allows us to further insulate against natural gas costs in our oils sands operations and has minimal impact on the company’s low overall corporate decline rate,” said Canadian Natural President Tim McKay in a statement.
Canadian Natural said the deal includes Painted Pony’s properties in Northeast British Columbia areas of Blair, Daiber, Kobes and Townsend, which together produce about 270 million cubic feet per day of natural gas and 4,600 barrels per day of natural gas liquids (NGLs).
According to the terms, Canadian Natural Resources will acquire Painted Pony’s outstanding shares for 69 cents per share in cash, a premium of 17 per cent to Friday’s closing price on the Toronto Stock Exchange.
Canadian Natural will also take on about $350-million of Painted Pony’s debt. The companies expect to close the deal in the second half of the year.
In a research note, Raymond James analyst Chris Cox said: “While investors were likely anticipating another oil sands transaction, the acquisition of PONY is consistent with the company’s long term strategy and track record of consolidating at the bottom of the cycle. We do not see the transaction as signaling a shift in strategy to re-focus on gas assets, at least over the near-term, even with an improving outlook for gas prices into 2021.”
Hardwoods Distribution Inc. (HDI-T) increased 12 per cent after it announced second-quarter sales of $296-million, down from $304.5-million a year ago.
Profit was $10.2-million or 48 cents per share versus a profit of $8.2-million or 38 cents a year ago.
Analysts were expecting revenue of $286.3-million and earnings of 31 cents.
U.S. hotel operator Marriott International Inc. (MAR-Q) posted a bigger-than-expected quarterly loss on Monday, as the coronavirus crisis curbed global travel and led to a plunge in room bookings.
Marriott’s shares, down 40.3 per cent this year, increased 3.6 per cent as the company also reported an 84.4-per-cent plunge in revenue per available room (RevPAR) - a key performance measure for the hotel industry.
However, Marriott echoed smaller rival Hilton’s comments from last week, saying it now expects a gradual rise in occupancy rates across the world although it may take a few years for them to return to pre-COVID period demand levels.
“While our business continues to be profoundly impacted by COVID-19, we are seeing steady signs of demand returning,” Chief Executive Officer Arne Sorenson said in a statement, adding that Greater China continued to lead the recovery.
Marriott said it was seeing a recovery across all regions, with global occupancy rates of 34 per cent for the week ended Aug. 1, up from 11 per cent in week ended April 11. In China, occupancy levels have reached 60 per cent.
The company said it has reopened 91 per cent of its worldwide hotels, compared with 74 per cent in April.
On an adjusted basis, Marriott reported a loss of 64 US cents per share in the second quarter ended June 30, bigger than analysts’ expectation of a loss of 42 US cents per share, according to IBES data from Refinitiv.
Barry Diller’s IAC/InterActive Corp said on Monday it has bought a 12-per-cent stake in MGM Resorts International (MGM-N) for about US$1-billion, sending the casino operator’s shares soaring 13.8 per cent.
The investment comes at a time when the gambling industry has been ravaged by government restrictions on movement due to the COVID-19 pandemic, as well as fears about public gatherings.
MGM reported a 91-per-cent fall in revenue in the latest reported quarter and has slashed its dividend to weather the impact of the health crisis on its financials. Shares of the company have sunk more than 35 per cent this year.
MGM’s online gaming business, which currently constitutes a tiny portion of its revenue, was what initially attracted Diller, the billionaire told shareholders in a letter.
“MGM presented a “once in a decade” opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online.”
Ensign Energy Services Inc. (ESI-T) sat up 1.6 per cent after it reported revenue for the second quarter came in at $194.8-million, down from $377.5-million a year ago. Analysts were expecting revenue of $188.1-million.
Its net loss attributable to common shareholders was $17.1-million or 10 cents per share compared to a net loss attributable to common shareholders of $30.2-million or 20 cents per share a year ago.
ATB Capital Markets analyst Waqar Syed said: “Overall, we view the results to be neutral to slightly positive. (1) The Company reduced its net debt by 9 per cent. (2) Guidance for operating rigs appear to be slightly better than expectations, although guidance on margins will be the key. (3) There was an EBITDA beat in the quarter, although we acknowledge it was largely related to rigs on standby, as well as early contract termination fees. However, the Company will likely continue to receive standby fees in subsequent quarters.”
On the decline
Barrick Gold Corp. (ABX-T) closed down 0.6 per cent on Monday after its profit and cash flow accelerated in the second quarter as the world’s second biggest gold miner benefitted from surging gold prices and managed to keep most of its mines running despite the worsening COVID-19 pandemic.
Toronto-based Barrick reported a net profit of US$357-million for the three months that ended on June 30, compared to US$194-million in the same quarter of 2019. The company reported adjusted earnings of 23 cents a share, four cents better than analysts surveyed by Refinitiv expected.
Barrick reported more than half a billion in free cash flow, compared to only US$55-million in the same period last year.
Last week, the price of gold raced past US$2,000 an ounce, breaching its previous all-time high of $1,920 an ounce in 2011. Over the past six months, bullion has benefitted from extraordinary volatility in financial markets because of the ongoing COVID-19 pandemic. Historically investors have sheltered in the metal during times of great uncertainty.
- Niall McGee
See also: As gold prices surge, Canadian producers better positioned than last rally
Neovasc Inc. (NVCN-T) fell 13.3 per cent after announcing before the bell a registered direct offering priced at-the-market.
The Vancouver-based company said it has entered into definitive agreements for the sale of an aggregate of 4,532,772 common shares at a purchase price of US$2.77575 per common share.
Eastman Kodak Co. (KODK-N) plunged 28.2 per cent after its US$765-million loan agreement with the U.S. government to produce pharmaceutical ingredients was put on hold due to “recent allegations of wrongdoing.”
Earlier this week, senior Democratic lawmakers asked federal regulators to investigate securities transactions made by the company and its executives around the time it learned it could receive the government loan.
“Recent allegations of wrongdoing raise serious concerns,” the DFC said late on Friday in a tweet.
“We will not proceed any further unless these allegations are cleared,” the DFC said. It was referring to a letter of interest it signed on July 28 with Kodak.
President Donald Trump on Tuesday said the government would investigate the circumstances surrounding the announcement of the loan, which will help the photographic-equipment maker shift into making pharmaceuticals at its U.S. factories.
Kodak shares surged more than 1,000 per cent last week after the loan was announced, generating a windfall for executives, some of whom had received options one day earlier.
With files from staff and wires
David Leeder