A roundup of some of the North American equities that made moves in both directions
On the rise
Aurora Cannabis Inc. (ACB-T) jumped 35 per cent on Thursday after announcing the acquisition of U.S. hemp-based cannabidiol company Reliva LLC.
After the bell on Wednesday, Edmonton-based Aurora said it will acquire all of the issued and outstanding membership interests of Reliva for US$40-million.
In a research note, Desjardins Securities analyst John Chu said: “Aurora’s all-stock acquisition of Reliva marks its first move into the federally legal U.S. hemp-derived CBD market. Not only does Reliva have production assets in the US and an existing broad distribution network, it also has an established product portfolio, including top-selling gummies and topicals. This appears to be a modest, low-risk and low-cost entry into the US to address what is expected to be a very fast-growing sector with an estimated market potential of over US$10-billion by 2024."
Lightspeed POS Inc. (LSPD-T) was up 37.8 per cent after it reported revenue in its latest quarter increased 70 per cent compared with a year ago as demand for its e-commerce offerings soared in the wake of the COVID-19 pandemic.
However, the retail payment technology firm said it expects the total dollar volume of transactions by its customers and demand for its services will be impacted and business failures among its customers, which includes restaurants and retailers, will increase so long as physical distancing measures remain in place in the core markets it serves.
“We delivered strong financial results to finish up our fiscal year, despite the difficult macro environment encountered through the back half of March,” Lightspeed chief financial officer Brandon Nussey said in a statement.
The Nova Scotia-based clinical stage biopharmaceutical company said it’s received positive preclinical results “demonstrating robust immunogenic and antibody responses from the majority of peptide epitopes.”
Starbucks Corp. (SBUX-Q) increased 0.5 per cent after it said on Thursday it had regained nearly two-thirds of its comparable U.S. store sales from the prior year, as it reopened stores and modified operations due to the coronavirus-related restrictions.
The coffee-chain said it was tracking slightly above its expected recovery as it opened large number of outlets in the United States in the second week of May.
The company had said it expects to reopen nearly 90 per cent of stores in June. Still, it warned on Thursday it would take time to fully recover and post positive comparable store sales growth.
Retailer Canada Goose Holdings Inc. (GOOS-T) was 3.5 per cent higher after it said on Wednesday it has laid off 125 workers, about 2.5 per cent of its global workforce, as part of steps to cope with the impact of COVID-19 on its business.
The luxury parkas maker said it will continue to support the laid-off employees with compensation packages and extended benefits and allow them to keep their work computers and phones.
The company said last month it was planning to reopen its Canadian facilities to make personal protective equipment (PPE), adding that, at full capacity, as many as 900 employees across Canada were going to be working to produce PPEs.
Boeing Co. (BA-N) rose 4.2 per cent after an equity analyst at RBC Dominion Securities initiated coverage with an “outperform” rating.
“Acknowledging the uncertainty regarding the 737-MAX and broader health of the airline industry, we see a favorable risk/reward profile in the stock,” said Michael Eisen. “Following the myriad of negative headlines that have plagued the stock, and investors, over the past 18 months, we believe there is more torque to the upside with much of the ‘uncertainty’ priced in.”
Ford Motor Co. (F-N) was up by 2.6 per cent a day after it closed two U.S. assembly plants as the coronavirus pandemic wreaked early havoc with the No. 2 U.S. automaker’s plan to restart North American production and begin making its most profitable vehicles again.
Ford closed its Dearborn, Michigan, plant due to a positive COVID-19 test by one worker, while its Chicago assembly plant was closed due to a parts shortage, Ford spokeswoman Kelli Felker said.
Ford declined to say which supplier had the issue, but a person familiar with the matter told Reuters that Lear Corp had closed a plant in Hammond, Indiana. Lear later confirmed in an email that it had closed the plant due to a positive test.
It was the second day in a row Ford had closed its Chicago plant, after closing it twice on Tuesday after two workers on different shifts also tested positive. Both the Dearborn and Chicago plants are expected to resume production later on Wednesday, Ms. Felker said.
Macy’s Inc. (M-N) gained 6 per cent after it said on Thursday it could rack up operating losses of up to US$1.11-billion in the first quarter, as the department store operator was forced to shut stores due to lockdowns aimed at curbing the spread of the new coronavirus.
Macy’s, which shut all of its 775 stores on March 18 to curb the spread of the coronavirus, hired investment bank Lazard Ltd to explore options for bolstering its finances, Reuters reported last month.
Despite online sales bringing some respite to retailers, Macy’s Chief Executive Officer Jeff Gennette said that could not offset the losses relating to store closures. Offering services, including curbside pickup where allowed, had helped the retailer keep business alive, Gennett said.
Macy’s, the largest U.S. department store operator by sales, said it expects to post an operating loss of between US$905-million and US$1.11-billion. It also forecast first-quarter sales in the range of US$3-billion to US$3.03-billion, down from US$5.50-billion a year earlier.
The loss excludes potential estimated pretax non-cash goodwill and asset impairment charges for the quarter.
Chinese technology company Baidu Inc. (BIDU-Q) gained 1.9 per cent after Reuters reported it is considering delisting from the U.S. Nasdaq and moving to an exchange closer to home to boost its valuation amid rising tension between the United States and China over investments.
Baidu, one of China’s earliest U.S. listings, is reaching out to some trusted advisers to see how it could best be done if it were to proceed, including looking at issues around funding and any regulatory reaction, the sources told Reuters.
The discussions are at an early stage and are subject to change, said the sources, who spoke on condition of anonymity because the matter is not public.
On the decline
Maple Leaf Foods Inc. (MFI-T) was down 0.3 per cent after announcing acceptance of a normal course issuer bid to purchase up to 7,460,000 of its common shares, representing approximately 10 per cent of the public float as at May 12.
“In deciding to establish the NCIB, the Company believes that the market price of the common shares may not, from time to time, fully reflect their value and accordingly the purchase of the common shares would be in the best interest of the Company and an attractive and appropriate use of available fund,” it said.
Consolidated revenue increased by 10 per cent year-over-year to $194.4-million due largely to a 50-per-cent jump in U.S. fracturing revenue ($20.2- million). Adjusted EBITDA decreased by 12 per cent to $3.8-million, which it attributed largely to a $2.5-million provision for bad debt and $1.9-million in severance recorded for headcount reductions.
Raymond James analyst Andrew Bradford said: "The in-line 1Q is secondary to STEP’s leverage amid the collapse in demand for fracturing services. STEP’s own forecasts suggest it will be offside on its credit facility covenants within the next two quarters - in agreement with our own forecasts.
“STEP has commenced discussions with its banking syndicate leads to seek covenant relief, though a deal has yet to be reached. STEP expects that if it obtains covenant relief, it will meet its financial commitments, including interest payments, for the next 12 months. We certainly have no corner-on-the-market for insight here, though it’s worth noting that our own estimates are less sanguine.”
Best Buy Co Inc. (BBY-N) slid 4.2 per cent despite its quarterly revenue and profit topped analysts’ estimates on Thursday due to a surge in online sales of electronics needed for consumers to work from home.
The electronics retailer was forced to shutter stores across the country for weeks to help contain the spread of the coronavirus, but outlets continued to provide curbside delivery for online sales that surged over 155 per cent on a comparable basis in the United States.
The lockdowns fuelled demand for monitors, printers and other work-from-home equipment, as well as gaming-related products.
Best Buy’s overall revenue fell 6.3 per cent to US$8.56-billion in the first quarter ended May 2, but beat analysts’ expectations of US$8.16-billion, according to IBES data from Refinitiv. Quarterly same-store sales fell 5.3 per cent.
Take-Two Interactive Software Inc. (TTWO-Q) slipped 5.9 per cent in the wake of topping analysts’ estimates for quarterly adjusted sales on Wednesday, helped by strong demand for its games NBA 2K and Grand Theft Auto as people stayed indoors due to coronavirus-induced lockdowns.
Videogame sales in the United States have surged in the last two months as the coronvirus outbreak shut down the country and forced millions to stay inside their homes, with sales in March hitting their highest in more than a decade.
Take-Two said it expects full-year adjusted revenue of between US$2.55-billion and US$2.65-billion, compared with analysts’ average estimate of US$2.71-billion, according to IBES data from Refinitiv.
On an adjusted basis, the game publisher’s adjusted revenue in the fourth-quarter ended March 31 stood at US$729.4-million, beating Wall Street expectations of US$584.04-million.
Expedia Inc. (EXPE-Q) was down 3.4 per cent in the wake of posting a bigger-than-expected quarterly loss and suspended quarterly dividends on Wednesday, as the COVID-19 pandemic decimated travel demand and hit bookings at the online agent.
Travel companies around the world are rushing to shore up finances after a steep fall in demand due to restrictions in movement that were imposed to curb the spread of the new coronavirus.
Expedia said gross bookings fell 39.2 oer cent to $17.89 billion in the first quarter, as the pandemic significantly impacted North America, its largest region, and cancellations exceeded bookings in March.
Cancellation inquiries for air travel managed without an agent rose to over 95 per cent in April from about 65 per cent in February, the company said.
Expedia withdrew its 2020 forecast in March, a further sign of deepening worries for the global travel industry ravaged by the pandemic.
With files from staff and wires