A roundup of some of the North American equities making moves in both directions today
On the rise
TransAlta Corp. (TA-T) rose on Thursday after announcing with its partner Tidewater Midstream & Infrastructure Ltd. (TWM-T) a new deal to sell the Pioneer Pipeline to Canadian Utilities Ltd. (CU-T) and subsidiary ATCO Ltd. (ACO-X-T) for $255-million, replacing an earlier agreement to sell it to a subsidiary of TC Energy Corp. (TRP-T) for the same price.
Atco acquired the right to purchase the Pioneer Pipeline through an option agreement with TC Energy’s Nova Gas Transmission Ltd. (NGTL)
The Pioneer Pipeline includes 131 kilometres of operating pipeline in Alberta. It runs from west of Drayton Valley to west of Edmonton.
The company says the pipeline will be integrated into NGTL’s and Atco’s Alberta natural gas transmission systems.
As part of the sale, TransAlta has entered into additional long-term gas transportation agreements with NGTL.
TransAlta owns and operates electrical power generation assets in Canada, the United States and Australia.
Artis Real Estate Investment Trust (AX.UN-T) gained after Sandpiper Group launched a proxy fight in a bid to oust most of the board after the commercial landlord announced a plan to spin off $779-million of its retail assets into a new trust.
Sandpiper, the Vancouver-based activist real estate investment firm, is looking to replace five of the seven members of Artis’s board of trustees, including chief executive Armin Martens, with its own slate. Sandpiper has more than 5 per cent of the trust units, having initially bought a stake in 2017, and has requisitioned a special vote.
- Jeffrey Jones
NuVista Energy Ltd. (NVA-T) soared after Paramount Resources Ltd. (POU-T) announced that it has acquired direct ownership and control of 17.3 million common shares for 61 cents per share or $10.6-million.
It said transaction was conducted as a block trade through the facilities of the TSX. The transaction increases its stake to 17.6-million up from 9.9 per cent.
“The purpose of the transaction was to increase Paramount’s investment in the NuVista shares at an attractive price pending further review and consideration of future plans,” it stated.
Paramount shares fell on the news.
SNC-Lavalin Group Inc. (SNC-T) rose after saying the U.S. Department of Energy has extended its underground tank operations contract with Washington River Protection Solutions (WRPS) for another year.
WRPS, an Amentum-led joint venture with SNC business unit Atkins Nuclear Secured, is responsible for safe management of radioactive and hazardous wastes stored in Hanford’s underground tanks.
SNC said activities will extend WRPS mission and focus towards site risk reduction in order to preserve and protect Columbia River.
Ford Motor Co. (F-N) was up after its new chief executive, Jim Farley, on Thursday promised the No. 2 U.S. automaker would move with urgency, in contrast to criticism his predecessor faced.
Mr. Farley, on his first day as Ford’s 11th CEO, also announced an executive shake-up that included naming a new chief financial officer.
Ford’s promise to accelerate its turnaround is not new at a time when it is executing on an US$11-billion restructuring.
Mr. Farley was named chief operating officer in February, and promised a faster return to stronger profits. He was officially tapped to succeed Jim Hackett in August.
“During the past three years, under Jim Hackett’s leadership, we have made meaningful progress and opened the door to becoming a vibrant, profitably growing company,” Mr. Farley said in a statement on Thursday. “Now it’s time to charge through that door.”
Ford reaffirmed its goal for operating margins of 8 per cent, something it identified as a 2020 target before the coronavirus pandemic hit. It did not specify when it would achieve this target.
The company also said John Lawlor would succeed Tim Stone as CFO.
Boeing Co. (BA-N) increased after Reuters reported Delta Air Lines (DAL-N) is among airlines it has approached to buy dozens of 737 MAX jets built for clients that have since scrapped their orders or gone bust.
As the 737 MAX edges closer to commercial flight after an 18-month grounding, Boeing is scrambling to find buyers for the so-called “white tails” - jets painted white, awaiting an airline livery, or whose color schemes need to be swapped.
Boeing has had discussions with Delta to take 40 of the 737 MAX “white tails,” the people said.
On Wednesday, Federal Aviation Administration (FAA) Chief Steve Dickson conducted a nearly two-hour evaluation flight at the controls of a Boeing 737 MAX, a milestone for the jet to win approval to resume flying after two fatal crashes.
“I like what I saw on the flight,” Mr. Dickson told a news conference afterwards, but said he was not ready to give the jet a clean bill of health, with FAA reviews still ongoing.
PepsiCo Inc. (PEP-Q) was up after it forecast full-year profit above market expectations on Thursday after a rebound in soda sales and increased demand for the company’s snacks during the COVID-19 crisis helped drive quarterly sales higher.
The packaged food company also beat revenue and profit estimates for the third quarter.
People spending more time working from home and taking online classes has led to a rise in demand for salty snacks, boosting demand for PepsiCo’s Tostitos, Cheetos and Doritos from households across North America.
Sales of snacks under the company’s Frito-Lay North America unit, rose 7 per cent in the quarter, while higher demand for breakfast foods led to a 6-per-cent rise at its Quaker Foods business.
“Both FritoLay and Quaker Foods continued to deliver robust growth as at home consumption trends have remained strong despite the measured reopening of economies and activities in certain areas, since May,” Chief Executive Officer Ramon Laguarta.
Higher demand for the company’s Starbucks branded coffee and energy drinks as well as low calorie versions of Gatorade, Mountain Dew and Pepsi helped boost revenue of PepsiCo’s North America beverage business by 6 per cent.
That helped offset a slump in sales at restaurants, theaters and stadiums, which has been hurting the unit’s revenue since the start of the pandemic.
In the reported quarter, net profit attributable to the company rose 9.1 per cent to US$2.29-billion, or US$1.65 per share. Excluding items, the company earned US$1.66 per share, beating market expectation of US$1.49 per share.
U.S. electric car maker Tesla Inc. (TSLA-Q) rose amid news it has cut the starting price of its Chinese-made Model 3 sedans on Thursday by about 8 per cent to 249,900 yuan (US$36,805), once Chinese subsidies for electric vehicles are taken into account, according to its China website.
Previously, the starting price for Model 3 sedans made in Tesla’s Shanghai factory with a standard driving range was 271,550 yuan, after state purchase subsidies.
Sources told Reuters that the standard range Model 3 sedans would now come with lithium iron phosphate (LFP) batteries which are cheaper than the nickel-cobalt-manganese (NMC) cells it used previously.
Tesla did not disclose what batteries the cheaper version uses.
The price for Model 3 vehicles with a longer range is now 309,900 yuan, down from 344,050 yuan.
Tesla started to deliver cars from the Shanghai factory in December, helping it save on shipping costs and tariffs for imported models.
Massachusetts-based Solid Biosciences Inc. (SLDB-Q) said on Thursday the U.S. Food and Drug Administration (FDA) has lifted the clinical halt placed on a trial of its experimental gene therapy for Duchenne muscular dystrophy (DMD), a muscle-wasting disorder.
The news sent the company’s shares soaring, with Solid Biosciences saying it expects to restart the trial of the drug, SGT-001, in patients with DMD in the first quarter of 2021.
The study was halted in November for the second time in less than two years after a seven-year-old boy experienced serious complications, such as a decrease in red blood cell count and acute kidney injury.
The U.S. health agency in July requested updated safety and efficacy data for all patients dosed in the trial and provided direction on total viral load to be administered per patient.
The halt had pushed Solid Biosciences further behind Sarepta Therapeutics Inc and Pfizer Inc in the race to develop the first gene therapy for DMD.
DMD is a progressive disorder that mainly affects men. It begins to cause symptoms at an early age, first by hampering the ability to walk and later by causing breathing difficulties and heart problems.
Some analysts have suggested that the Sarepta gene therapy appears to have a better safety profile in early trials than Pfizer’s.
Conagra Brands Inc. (CAG-N) finished higher after the Chicago-based company reported better-than-expected profit and sales in the first quarter, as coronavirus-induced at-home eating trends boosted demand for its frozen vegetables, snacks and ready-to-eat meals.
The company also raised its quarterly cash dividend by 29 per cent.
With more people cooking meals at home, demand for ingredients such as Conagra’s Duncan Hines cake mixes, Hunt’s ketchup and Birds Eye frozen vegetables have shot up since the pandemic’s outbreak in March.
Shoppers have also been trying out more healthy frozen meals, adding more Healthy Choice ready-to-eat meals to their checkout carts.
Conagra’s Slim Jim Beef Jerky and Snack Pack snacks saw double-digit organic growth in the three months to Aug. 30.
First quarter net sales rose 12.1 per cent to US$2.68-billion, above the US$2.61-billion analysts on average had expected, according to Refinitiv IBES. Adjusted earnings rose to 70 US cents per share, 13 US cents above the average estimate.
On the decline
Acreage expects to launch Canopy’s select, sessionable THC beverages in legal adult-use markets in Illinois and California. THC is the psychoactive ‘high’ inducing part of marijuana.
A growing number of companies are seeking to capture a larger chunk of the U.S. cannabis industry, with the recreational use of marijuana by adults now legal in 11 states.
“We see THC-infused beverages as a game-changer in U.S. cannabis, and we are excited to launch Canopy Growth’s unique beverage offerings to our core markets offering the greatest growth potential next year,” said Bill Van Faasen, Interim CEO of Acreage Holdings.
Trican Well Service Ltd. (TCW-T) dipped with the announcement of the completion of its 2019-2020 normal course issuer bid.
The Calgary-based oilfield services provider repurchased 24.75 million common shares at 99 cent each for total consideration of $24.6-million.
Source Energy Services Ltd. (SHLE-T) fell after announcing late Wednesday it has entered into an agreement to further defer an interest payment due on June 15. It has previously received a 107-day deferment.
In a research note, ATB Capital Markets analyst Tim Monachello said: “Our current estimates suggest that SHLE was likely in breach of its covenant at the end of Q3, and this waiver was likely a necessity. We believe the additional 31 days of liquidity support is needed to provide additional time for SHLE and its lenders to find a long-term solution. We continue to believe a long-term solution to rectify SHLE’s elevated leverage position is likely to result in a recapitalization event which carries a high risk of dilution for equity holder.”
Exxon Mobil Corp. (XOM-N), the largest U.S. oil major, declined in the wake of saying in a filing it expects to post a quarterly loss from its production business for the third consecutive time this year, as it continues to suffer from a crash in commodity prices due to the coronavirus pandemic.
Exxon reported its first back-to-back quarterly loss in at least 36 years in July and vowed to make deep spending cuts to cope with sharply lower energy demand and prices.
Analysts at Tudor, Pickering, Holt & Co said the items highlighted in Exxon’s pre-results filing point to Exxon posting a loss closer to 30 US cents per share, much higher than the 7 US cents per share estimated by Refinitiv IBES. The company is due to report third-quarter results on Oct. 30.
Higher crude prices will help Exxon’s exploration and production earnings by US$1.4-billion to US$1.8-billion, compared with the second quarter, the company said. However, weak gas prices will continue to weigh on the segment and could hurt earnings by as much as US$500-million.
Lower demand for fuels would hurt refining margins by US$200-million to US$600-million, the company said, adding that logistics differentials could also hurt the refining division by as much as US$200-million.
U.S. insurer Allstate Corp. (ALL-N) was down after it said on Wednesday it would cut about 3,800 jobs, or nearly 8 per cent of its workforce, as part of a multi-year restructuring plan.
The firm said it expects to incur a pre-tax charge of US$290-million as part of the restructuring, with US$210-million to US$220-million expected to be recognized in the third quarter.
Additionally, office closures have led the insurer to flag pre-tax real estate exit costs of about US$80-million.
Allstate said it expects the charges to impact both net income and adjusted net income, with severance and employee benefits accounting for most of the primary costs.
“Implementing this plan is difficult as we still deal with the impact of the pandemic but necessary to provide customers the best value,” Chief Executive Officer Tom Wilson said in a statement.
Prolonged low interest rates would also impact third-quarter earnings, the insurer added.
Allstate had nearly 45,780 full-time employees and 510 part-time employees at the end of last year, according to a filing.
Medtronic Inc. (MDT-N) slid after the Wall Street Journal reporting the U.S. Justice Department is investigating if acquisitions by the medical device maker hindered competition in ventilator manufacturing.
Demand for ventilators sky-rocketed following the coronavirus outbreak in the United States, leading President Donald Trump to sign an order for General Motors to start making ventilators.
Medtronic has received a civil subpoena from the department requesting more information, according to the report.
The probe is centered on two acquisitions - when Covidien Plc bought a small manufacturer of ventilator systems Newport Medical Instruments in 2012 and Medtronic’s acquisition of Covidien nearly three years later, the report said.
“Medtronic is cooperating fully with DOJ’s review of the 2012 Covidien-Newport transaction,” said Medtronic spokesperson Ben Petok, adding that the deal was appropriately assessed and approved by the Federal Trade Commission in 2012.
Goldman Sachs Group Inc. (GS-N) was down after a company spokesperson said it plans to move forward with “a modest number of layoffs”, months after the Wall Street bank paused job cuts due to the COVID-19 pandemic.
Bloomberg News, which first reported about the layoffs, said the bank was looking to cut about 400 jobs, or roughly 1 per cent of its workforce, citing people familiar with the matter.
“At the outbreak of the pandemic, the firm announced that it would suspend any job reductions. The firm has made a decision to move forward with a modest number of layoffs,” a Goldman Sachs spokesperson said.
Many of the cuts in the current round are tied to back-office roles that had been folded into bigger money-making divisions as part of an earlier reorganization, according to the Bloomberg report Goldman Sachs' annual cull has long set it apart from Wall Street rivals, which tend to make mass layoffs periodically.
In January, Goldman said it was aiming for a 60-per-cent efficiency ratio over the next three years, compared with 68 per cent in 2019. A lower efficiency ratio means a bank is better at managing costs relative to revenue.
With files from staff and wires