A roundup of some of the North American equities that made moves in both directions
On the rise
Tesla Inc. (TSLA-Q) rose 4.3 per cent after the China Passenger Car Association (CPCA) said on Thursday it sold 10,160 vehicles in China in March, its highest ever monthly sales in the world’s largest auto market.
Tesla, which aims to produce 150,000 Model 3 sedans from its US$2-billion Shanghai factory, sold around 30 per cent of the battery electric vehicles sold in China, Cui Dongshu, CPCA secretary general, said on an online briefing.
Tesla sold around 3,900 units in February, up from 2,620 vehicles in January, CPCA data showed. CPCA uses a different counting method than Tesla’s deliveries.
Overall passenger car sales in March were down 40.8 per cent from a year earlier.
Walt Disney Co. (DIS-N) jumped 3.8 per cent after revealing late Wednesday that Disney+ has attracted more than 50 million paid users, with 8 million of them coming from India where the video streaming service was rolled out last week.
Rival Netflix Inc. (NFLX-Q), which has services available in over 190 countries, has nearly 167 million paid subscribers globally as of its last reported quarter.
Netflix shares were down 0.1 per cent.
Credit Suisse analyst Douglas Mitchelson said: "This is a clear positive for the value Disney is creating in streaming as: (1) it suggests churn off its record C4Q19 launch has been at least manageable, if not low; (2) the launches in 8 Western European markets (April 7th for France, March 24th for the rest) likely have gone quite well; and (3) Disney is clearly tracking way ahead of its guidance, having already achieved 70% of the low end of its 5-year 60m-90m guidance range ex-India in only 5 months. Overall, Disney is proving to be a fast follower in streaming, but we would point out Disney+ outperformance only increases our confidence that Netflix is also seeing stay-at-home strength in March/April.
“Plenty of Execution Remains: First, Hollywood production shutdowns put at risk the timing of key Marvel and Star Wars original series launches later this year, starting with Falcon and the Winter Soldier which was originally slated in August. Originals are important for not just marketing to potential new subscribers but managing churn, given Disney+ has a limited amount of content to bring adults in to begin with (it has plenty of kids content, and animation productions, which can be advanced remotely, are likely still making progress). Second, telecom distribution partners, many of which have free offers for customers, are boosting initial marketing (as a reminder, Verizon was ~6m of the service’s initial 28m subs). It is unclear how those relationships will evolve over time and what the ultimate churn of that subscriber base will be. Third, many customers are choosing 1+ year subscriptions for their more attractive price point, keeping initial churn low. Fourth, it is hard to extrapolate Disney+’s initial high take rate given Disney’s brand strength, quality of library (much of which has been well rested), and current stay-at-home dynamics. Finally, it is important that Disney+ is ultimately able to pull through Hulu internationally once it launches, given Hulu conversely lacks any brand presence overseas and does not share Disney+’s level of content differentiation in the market.”
U.S. drugmaker Pfizer Inc. (PFE-N) rose 2.3 per cent after saying Thursday that early data has helped it identify a drug candidate with the potential to help treat patients infected with the novel coronavirus.
It also said it plans to support studies to determine whether existing Pfizer medicines, including its rheumatoid arthritis drug Xeljanz, may provide benefits for those struggling with the COVID-19 respiratory illness caused by the coronavirus.
More than a dozen large drugmakers, including Pfizer, have announced plans in recent months to develop vaccines and treatments for the coronavirus, although few if any are likely to reach patients in time to stem the current outbreak.
Pfizer first revealed plans to try to develop an antiviral compound for COVID-19 in March, and later said it was working with BioNTech SE on a potential vaccine based on messenger RNA technology.
It also announced a five-point plan for confronting the virus that includes collaborating with outside companies and institutions on the research, development and manufacture of treatments.
“Pfizer has mobilized resources and capabilities to address every single frontier of the COVID-19 pandemic,” Pfizer research chief Mikael Dolsten told Reuters in an interview.
BlackRock Inc. (BLK-N), the world’s largest asset manager, was 4.5 per cent higher in the wake of Chief Executive Officer Larry Fink saying late Wednesday it will not layoff any employees during the year due to the coronavirus outbreak, .
The company will also pay full-time wages to support staff, such as cafeteria and maintenance workers, even if they cannot come to work, Fink wrote in a LinkedIn post.
He said more than 90 per cent of asset manager’s employees were working remotely.
Keyera Corp. (KEY-T) was up 5.6 per cent in the wake of announcing it plans to suspend operations at four of its gas plants located in west central Alberta.
Keyera said it expects to suspend operations at its Minnehik Buck Lake and West Pembina gas plants in the second half of 2020, followed by the Ricinus and Nordegg River gas plants in 2021.
“The optimization plan is intended to enhance Keyera’s long term competitive positioning by increasing utilization at its existing facilities, reducing per unit operating costs, and providing higher netbacks for producer customers,” the company said. “This optimization plan also aligns with Keyera’s environmental efforts by reducing its overall greenhouse gas emissions. Keyera will continue to advance the plan over the coming months and will provide more information in the second half of this year.”
Kirkland Lake Gold Ltd. (KL-T) jumped 6.3 per cent after announcing late Thursday it has suspended exploration drilling at all its sites.
The miner also pre-released its first-quarter production results.
Starbucks Corp. (SBUX-Q) gained 3.2 per cent after announcing after the bell on Wednesday it is forecasting a 47-per-cent drop in second-quarter earnings, scrapping its full-year forecast and warning that the financial hit from the coronavirus pandemic would extend into the final quarter of the fiscal year 2020.
The company also said it would temporarily suspend its share buyback program and take steps to cut costs, but would maintain its quarterly dividend.
Starbucks said it now expects to report second-quarter earnings of about 28 US cents per share, reflecting the impact of lost sales for the period as well as higher costs. It had reported 53 US cents per share in the year-earlier period.
The world’s largest coffee chain said same store sales in the United States began to decline on March 12 and have steadily worsened.
The company also said revenue in China faced a shortfall of about US$400-million compared with its expectations, with a 50-per-cent decline in comparable store sales for the second quarter ended March.
On the decline
Loblaw Companies Ltd. (L-T) fell 3.6 per cent after withdrawing its 2020 financial outlook, noting “it is difficult to predict with precision how Loblaw’s business will perform for the balance of the year relative to its previously published guidance.”
“Beginning in March, Canadians turned to grocery stores and pharmacies in record numbers. The result was a significant increase in sales, with demand for essential items up strongly while customers started to shift away from discretionary categories,” the company said in a statement.
Lightspeed POS Inc. (LSPD-T) slid 2 per cent after saying it expects fourth-quarter revenue to be at the upper end of its guidance issued in February. Adjusted earnings are expected to come in ahead of the previous guidance.
However, the company, which provides point-of-sale systems, said social distancing measures are having a negative impact on its retail and hospitality clients.
Raymond James analyst Steven Li said: “The uncertainty regarding the duration and magnitude of the COVID-19 pandemic continues to impact retail and hospitality customers. As long as social distancing measures persist, LSPD expects a negative impact on its financial performance (lower GTV, higher churn). Mitigating factors include LSPD’s decision to enact cost-containment measures as well as offer subscription discounts and deferred payment arrangements to merchants.”
"LSPD is cashed up (US$220-million in cash plus $25-million available under its secured credit facility) to weather these near-term challenges but we believe also places them in a strong position to take advantage of market dislocations.
Just Energy Group Inc. (JE-T) was down 12.7 per cent after providing an update on its previously announced strategic review process taking into account the impacts from COVID-19, saying it’s “no longer in active discussions regarding a specific transaction at this time, but is continuing to explore and evaluate alternatives under the strategic review process, including additional cost reduction and optimization strategies, improving efficiencies and eliminating redundancies, sales of certain assets, improvements to liquidity and leverage, refinancings and the sale of the entire business.”
See also: Just Energy shareholder seeks shakeup
Costco Wholesale Corp. (COST-Q) slid 1.9 per cent after reporting late Wednesday a 9.6-per-cent jump in March comparable sales, as customers stocked up on essentials to weather coronavirus-led lockdowns.
U.S. comparable sales rose 10.7 per cent for five weeks ended April 5, while e-commerce sales surged 48.3 per cent, Costco said in a statement.
The company said last month that it was seeing a big jump in sales due to the coronavirus crisis and was forced to place quantity limits on some products including bleach, bottled water and dry grocery items.
Costco, which currently operates 787 warehouses including 547 in the United States and Puerto Rico, also reported a 11.7-per-cent jump in March sales to US$15.49-billion, compared with a year earlier
On Thursday, China’s state media reported the companywill open a new store in the eastern city of Suzhou, near Shanghai.
Costco’s subsidiary in Suzhou on Thursday bought a piece of land in Suzhou New District at a cost of more than 142.5 million yuan (US$20.2-million), according to the management committee of Suzhou New District. The plan is for a warehouse store with a floor area of more than 50,000 square meters to be built on the site.
General Electric Co. (GE-N) slid 2.3 per cent after withdrew its full-year forecast on Thursday as it takes a hit from the coronavirus pandemic, but reaffirmed its first-quarter industrial free cash flow outlook of negative US$2-billion.
“With net proceeds of about $20 billion from the BioPharma transaction now in hand, we have more flexibility to de-risk and further strengthen our balance sheet,” said Lawrence Culp, chief executive officer.
Last month, GE sold its biopharma business to Danaher Corp as it focuses on its core aviation and power businesses.
The company had earlier forecast first-quarter industrial free cash flow of about negative US$2-billion.
GE said its first-quarter adjusted earnings will now be materially below its prior expectations of about 10 US cents per share.
With files from Brenda Bouw, Terry Weber, staff and wires
David Leeder