A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of International Business Machines Corp. (IBM-N) soared on Thursday after announcing it would spin off its IT infrastructure unit to focus more on cloud computing, a high-margin business that has seen a boost as companies increasingly ramp up their digital shift.
IBM has trimmed its legacy businesses over the years to focus on cloud, aiming to make up for slowing software sales and seasonal demand for its mainframe servers.
Arvind Krishna, who took over as chief executive officer from Ginni Rometty in April, said IBM’s software and solutions portfolio will account for the majority of company revenue after the separation.
Mr. Krishna is known as the “principal architect” of IBM’s biggest acquisition, software company Red Hat, which was bought for US$34-billion last year.
“The success we’ve had with Red Hat gives us confidence that this is the right move,” Mr. Krishna said, calling the move a “significant shift” in the company’s business model.
The separation of the new company, a tax-free spin-off to shareholders, will be completed by the end of 2021, IBM said.
Bausch Health Companies Inc. (BHC-T) jumped higher after announcing before the bell it expects third-quarter revenue to be greater than US$2.1-billion, which would be an increase of almost 28 per cent from the second quarter but down 3 per cent year-over-year.
Reported revenue in the second quarter dropped 23 per cent from the same period a year ago.
“Additionally, based on the pace of recovery of its various businesses observed in the third quarter of 2020 and assuming its businesses continue to rebound from the impact of the COVID-19 pandemic, Bausch Health currently expects its full-year 2020 revenue and Adjusted EBITDA (non-GAAP) to be around the midpoint of its current guidance ranges of $7.80 – $8.00 billion for revenue and $3.15 - $3.30 billion for 2020 Adjusted EBITDA (non-GAAP),” the Laval-based company said.
The Montreal-based airline says it completed the sale of nine Boeing 737 Max 8 aircraft for $485-million and long-term lease commitments of $458-million.
Chief financial officer Michael Rousseau says the airline has raised almost $6-billion in liquidity since the start of the pandemic to mitigate the challenges and uncertainty caused by the virus.
It also recently completed two long-term financings to replace $1.4-billion in short-term debt coming due within the next nine months.
Air Canada says it will continue to explore other financing arrangements that may be required to expand its cash position.
In a research note, M Partners said: “The company significantly beat expectations driven by strong results from its patent licensing segment (WiLAN), as well as International Road Dynamics Inc. (IRD). Preliminary results include consolidated revenue in the range of $80-87-million versus our expectations of $18.1-million and consolidated adjusted EBITDA in the range of $32-36-million versus our expectations of $2.5-million. Contract wins in the licensing segment are front-end loaded and adjusted EBITDA typically approximates cash flow. We expect to see a significant improvement to QTRH’s already strong cash balance, providing a higher floor for its share price.”
The Toronto-based company is set to buy 25.8 million units at a price of 23.4 cents per unit, which is comprised of one common share of Maple and one common share purchase warrant.
At the same time, Agnico Eagle and Maple have entered into a binding term sheet to examine the possibility of the formation of a 50-50 joint-venture, which will combine Maple’s Douay Project and Agnico Eagle’s Joutel Project into a consolidated joint property package. Both projects are adjacent properties located in the Abitibi region of Quebec.
Maple shares soared on the news.
Eli Lilly and Co. (LLY-N) rose after saying it had entered into an agreement with the Bill & Melinda Gates Foundation for potential supply of its experimental antibody treatments for COVID-19 to low and middle-income countries.
As part of the deal, Lilly will make certain volumes of its antibody therapies available to lower-income countries prior to April 2021.
The company said its partners with which it is developing antibody therapies, including Canadian biotech company AbCellera Biologics Inc, had agreed to waive their royalties on the therapies distributed in low- and middle-income countries.
Data in September showed that Lilly’s single antibody therapy, LY-CoV555, helped cut hospitalization and emergency room visits for COVID-19 patients.
A dual-antibody combination also showed similar results on Wednesday. Lilly plans to seek U.S. emergency use authorization for that combination next month.
Johnson & Johnson (JNJ-N) was up on a deal with the European Union to supply up to 400 million doses of its potential COVID-19 vaccine, as the bloc builds up stocks amid a global scramble to secure shots.
The deal announced on Thursday by the European Commission is its third advance purchase contract with makers of COVID-19 vaccines after deals with AstraZeneca and Sanofi , bringing the number of doses secured by the EU for its population of 450 million to 1.1 billion.
Under the terms of the deal, the 27 EU states will be able to order up to 400 million doses of the potential vaccine after it is authorized by the EU medicine regulator.
To secure the vaccines, the EU made an undisclosed downpayment to J&J, which confirmed the deal in a statement in which it reiterated plans to allocate up to 500 million additional doses to poorer countries from mid-2021.
EU states would pay the full price only when they order it. The price and liability conditions are confidential.
Regeneron Pharmaceuticals Inc. (REGN-Q) continued to rise in the wake of U.S. President Donald Trump being treated last week with its experimental therapy.
On Wednesday, Mr. Trump promised to make it free to Americans while touting its benefits.
Medical experts said more data is needed to assess the treatment’s efficacy before wider use should be allowed.
Mr. Trump was discharged from the hospital late on Monday, just a few days after being diagnosed with COVID-19 that caused enough lung inflammation for blood oxygen levels to fall.
According to his doctor, blood tests on Monday detected infection-fighting antibodies, which a Regeneron spokesperson said were probably from the treatment.
The company said on Wednesday that it has submitted a request to the U.S. Food and Drug Administration for an emergency use authorization (EUA) for its antibody combination.
Morgan Stanley (MS-N) gained after it agreed on Thursday to buy asset management firm Eaton Vance Corp. (EV-N) for about US$7-billion in a cash-and-stock deal that advances Chief Executive James Gorman’s push to bolster the bank’s wealth and investment management businesses.
Eaton’s shareholders will receive US$28.25 per share in cash and 0.5833 Morgan Stanley shares for each share held. The deal represents a premium of 38 per cent to Eaton’s last closing price on Wednesday.
Gorman has been trying to build out the bank’s wealth management unit to insulate it better from weak periods for its trading and investment banking operations.
The acquisition means Morgan Stanley Investment Management will have approximately US$1.2-trillion of assets under management and over US$5-billion in combined revenues, Morgan Stanley said.
“Eaton Vance is a perfect fit,” Gorman said in the statement announcing the deal.
Chevron Corp. (CVX-N) was higher amid reports its employees worldwide are being asked to reapply for positions as part of a cost-cutting program expected to eliminate up to 1 per cent of its workforce.
The No. 2 U.S. oil producer has begun taking steps to streamline its organization this year to reduce costs and revive declining profits. Oil companies have posted huge losses on asset writedowns and slashed spending as economic downturns caused by the COVID-19 pandemic undercut fuel demand.
On Wednesday, Chevron’s market value leapfrogged that of Exxon Mobil (XOM-N) for the first time on Wednesday during a week in which it closed a US$4.1-billion, all-stock deal for Noble Energy, a smaller oil and gas producer.
Chevron’s market cap ended the day around US$142-billion, topping Exxon Mobil’s US$141.65-billion market value at the end of trade, according to Refinitiv data and Chevron SEC filings pertaining to the Nobel deal.
Dick’s Sporting Goods Inc. (DKS-N) rose after it said on Thursday it will hire up to 9,000 workers to cover the holiday season in its stores, 1,000 more than last year, expecting a jump in online orders amid the coronavirus pandemic.
Retailers have struggled this year, with mall traffic declining across the United States as stores in states such as California continue to operate under severe restrictions to combat the spread of COVID-19.
The number of people visiting Dick’s outlets fell by nearly 54% in May, data firm Placer.ai showed, around when many Dick’s stores were temporarily shut closed. While this has since improved, traffic is still about 9% lower than last year, the data shows.
Pennsylvania-based Dick’s expects in-store foot traffic to improve from earlier this year, with demand for products such as kayaks, golf clubs and bicycles up as many people turn to non-contact sports.
Boeing Co. (BA-N) rose after Reuters reported it is in discussions to sell 737 MAX jets to Alaska Air Group Inc. (ALK-N) once the plane returns to service following a lengthy grounding, three people familiar with the matter said.
The talks are part of a series of negotiations between Boeing and several airlines over jet orders or compensation after the 737 MAX was banned worldwide following two fatal crashes.
Boeing and Alaska Air declined to comment.
Any deal would be subject to U.S. Federal Aviation Administration approval of proposed 737 MAX safety upgrades.
Alaska Air already had ordered 37 of the jets before the grounding. If confirmed, a new order from such a major carrier would give Boeing’s 737 MAX a sorely needed commercial boost as the U.S. planemaker tries to move beyond a crisis that has hammered its finances.
Shares of fuboTV Inc. jumped in their market debut on Thursday, after the streaming provider raised US$183-million in its upsized initial public offering.
Stock opened at US$11 per share on the New York Stock Exchange, compared to the IPO price of $10 per share.
At the debut price, fuboTV was valued at US$684.3-million.
The company sold 18.3 million shares in its offering, up from its aim of selling 15 million shares between US$9 and US$11 apiece.
The company’s IPO comes at a time when customers under lockdown looking for more at-home entertainment have boosted demand for streaming services.
Founded in 2015, fuboTV began as a sports-focused streaming service before expanding to news and entertainment, adding channels such as ABC, Disney Channel, and FX.
On the decline
Waterloo, Ont.-based BlackBerry Ltd. (BB-T) was narrowly lower after announcing it has partnered with ServiceNow Inc. (NOW-N) to integrate its AtHoc service within the Now platform for rapid crisis communications and IT service management.
“By integrating BlackBerry AtHoc into the Now Platform workflow stack, IT operations teams can now leverage multiple communications channels in the case of an incident, allowing for more efficient and secure communication. This leads to higher levels of collaboration with the wider business to maintain efficiency, productivity and profitability,” the company said.
Cascades Inc. (CAS-T) was down after announcing it will “progressively and permanently” close tissue production and converting operations at its Ransom and Pittston plants in Pennsylvania between Dec. 7 and Jan. 31.
The company said its two paper machines at Ransom have a total annual production capacity of 50,000 tons of tissue paper. The conversion of that volume into 6 million cases of product occurs primarily at the Pittston plant.
It plans to move these activities to other Cascades plants and filled with additional capacity.
McDonald’s Corp. (MCD-N) was down in the wake of revealing its global sales improved in the third quarter versus the second quarter, down just 2.2 per cent year over year, as drive-thru orders surged and special promotions lifted sales to double-digit percentage increases in September, the company said on Thursday.
Comparable sales had plunged nearly 24 per cent the previous quarter as dining rooms shut and U.S. customers stayed home during the early months of the coronavirus pandemic.
Amid the uncertainty earlier this year about the outbreak and its impact on operations, the Chicago-based burger chain held back on advertising spending but has now begun to deploy that stash of cash in national campaigns.
In mid-September, it launched a limited-time promotional deal with rapper Travis Scott and quickly began to run out of ingredients to assemble its signature Quarter Pounder sandwich, which was featured in the meal.
It also added Spicy Chicken McNuggets and ran special offers for National Cheeseburger Day.
Global results were driven by positive momentum in the United States, where same-store sales rose 4.6 per cent in the quarter ended Sept. 30, according to the financial filing.
Domino’s Pizza Inc. (DPZ-N) was down despite reporting a better-than-expected rise in quarterly comparable sales on Thursday as customers ordered more of its pizzas through delivery and takeout during the COVID-19 pandemic.
Pizza chains have been among the few winners of the health crisis, as consumers avoiding crowds for fear of contracting the coronavirus order more comfort foods to their doorsteps.
The resumption of sports leagues such as the National Basketball Association and the National Hockey League has also boosted demand for pies and chicken wings.
Sales at Domino’s U.S. stores open for more than a year rose 17.5 per cent in the third quarter ended Sept.6, exceeding Wall Street estimates of 13.14 per cent, according to IBES data from Refinitiv.
International same-store sales growth of 6.2 per cent was also above analysts' expectations of 1.99 per cent.
Domino’s has been focusing on tech innovations and has also broadened its menu with additions such as chicken tacos and cheeseburger pizzas to keep its customers from switching to rivals McDonald’s, Papa John’s and Pizza Hut , among others.
Carnival Corp. (CCL-N) slid in the wake of reporting a smaller-than-expected quarterly loss and said advanced bookings for next year were improving, indicating renewed demand for cruising.
The cruise operator, which sails AIDA, Costa and Princess cruises among others, has paused voyages since March due to the COVID-19 pandemic, bringing its business to a standstill.
The company, however, said bookings for the second half of 2021 were at the higher end of the historical range, even as prices are down by mid-single digits compared to last year.
Total customer deposit balance as of Aug. 31 was US$2.4-billion, the majority of which were credits given by Carnival for canceled trips, compared to US$2.9-billion last year.
“We have come full circle from initiating a suspension in the early days of the pandemic, to transitioning the fleet into a pause status, right sizing our organization and, now, embarking on the phased resumption of guest operations,” Chief Executive Officer Arnold Donald said.
With files from staff and wires