A roundup of some of the North American equities making moves in both directions today
On the rise
Before the bell, a pair of equity analysts on the Street raised their ratings for the Calgary-based company.
“With a long saga surrounding KXL coming to an end (at least this part of it), a less “noisy” TRP combined changes to our financial model equates to a more attractive risk-reward relationship,” Credit Suisse’s Andrew Kuske said.
“On a longer-term basis, we believe some of the key questions become the ability to backfill meaningful capex from the current asset base (along with natural extensions) along with acquisition aspirations starting to creep into the narrative.”
Early Thursday, TC Energy told employees it will eliminate more than 1,000 construction jobs in coming weeks, and halt work on the Keystone XL oil pipeline, due to Biden’s decision.
·Q4 production results were better than expectations across all commodities and at most mines including Candelaria and Chapada, which faced challenges during the quarter,” said BMO’s Jackie Przybylowski in a research note.
“The company reported progress across all its operations, and we expect continued improvement through 2021.”
Property and casualty insurer Travelers Cos Inc. (TRV-N) rose after it reported a jump in quarterly profit that beat analysts’ estimates on Thursday, helped by an increase in returns from investments and lower catastrophe claims.
The company reported a core income of US$1.26-billion, or US$4.91 per share, in the fourth quarter ended Dec. 31, compared with US$867-million, or US$3.32 per share, a year earlier.
Analysts had expected a profit of US$3.18 per share on average, according to Refinitiv data.
New York-based Travelers, often seen as a bellwether for the insurance sector as it typically reports before its industry peers, said net written premiums rose 3 per cent to US$7.27-billion for the reported quarter.
The insurer’s strong quarter caps off a year of the COVID-19 pandemic, which has had a far less impact on property casualty insurers than many investors expected, mainly because of pandemic-related exclusions in their contracts.
Travelers’ underwriting gains rose to US$955-million from US$513-million a year earlier, while pre-tax net investment income rose 10 per cent to US$677-million, helped by gains in its non-fixed income investment portfolio.
U.S. apparel retailer American Eagle Outfitters Inc. (AEO-N) increased in the wake of forecasting a bigger-than-expected fall in its revenue for the holiday quarter, blaming weak mall traffic and store closures stemming from the COVID-19 pandemic.
The retailer said it expects a low single-digit fall in its fourth-quarter revenue, compared with analysts’ estimates of a 0.14-per-cent dip, according to IBES data from Refinitiv
The company also laid out its long-term financial targets, ahead of its shareholder meeting later in the day, saying it targeted revenue of US$5.5-billion in fiscal 2023. It had posted a revenue of US$4.31-billion in the last reported fiscal year.
On the decline
Vancouver-based Eldorado Gold Corp. (ELD-T) was down after announcing before the bell it has struck a deal to buy the shares of Quebec exploration company QMX Gold Corp. (QMX-X) it doesn’t already own in a cash-and-shares transaction worth $132-million or 30 cents per share.
Eldorado owns about 17 per cent of the QMX shares, purchased for six cents each in a private placement at the end of 2019. It’s offering 7.5 cents in cash and 0.01523 of an Eldorado share for the rest.
CEO George Burns says the deal opens up expansion opportunities for Eldorado within its operating footprint as QMX’s lands are located adjacent to its Lamaque underground gold mine at Val-d’Or, Que.
In a note to investors, National Bank analyst Mike Parkin says the deal would expand Eldorado’s Abitibi footprint and supports a “hub-and-spoke” production model with a central processing facility.
Shares in QMX rose by as much as 35 per cent or 7.5 cents to 29 cents on Thursday as Eldorado shares fell by as much as five per cent or 75 cents to $14.02.
Shareholders in QMX are to vote on the proposed deal in March.
Oil and gas producers have been forced to cut their budget, restructure operations and reduce employees, to tackle the COVID-19 pandemic-led fallout in energy demand and prices.
“We believe this macro environment likely translates into a tepid investment environment for oil and gas during the first half of 2021,” said Baker Hughes Chief Executive Officer Lorenzo Simonelli.
“However, we expect spending and activity levels to gain momentum through the year as the macro environment improves, likely setting up the industry for stronger growth in 2022.”
The company’s total revenue for the fourth quarter rose nearly 9% to US$5.5-billion compared with the third. Analysts had expected revenue of US$5.42-billion, according to Refinitiv IBES data.
Adjusted operating profit was US$462-million, in the three months ended Dec. 31, higher than US$234-million in the third quarter.
Union Pacific Corp. (UNP-N) fell despite beating Wall Street estimates for quarterly profit, as the U.S. railroad operator benefited from higher volumes of grain and intermodal shipments.
Analysts expect the recovery in railroad volumes to continue in 2021, with a pick-up in demand giving way to broader-based gains in rail traffic, spurred by industrial and commodity end markets.
Volumes, as measured by total revenue carloads, rose 3 per cent in the fourth quarter from a year earlier. Freight revenue, however, fell 1 per cent to US$4.80-billion.
The company’s net income fell to US$1.38-billion, or US$2.05 per share, in the quarter ended Dec. 31, from US$1.40-billion, or US2.02 per share, a year earlier.
Total operating revenue fell to US$5.14-billion from US$5.21-billion.
Excluding items, the company earned US$2.36 per share.
Analysts on average had expected earnings of US$2.30 per share, according Refinitiv data.
Tesla Inc. (TSLA-Q) was flat as its vehicle registrations in California jumped nearly 63 per cent during the fourth quarter compared with last year, largely due to the success of the company’s Model Y, according to data from Cross-Sell, a research firm that collates title and registration data.
The automaker reported better-than-expected 2020 vehicle deliveries earlier this month, driven by a steady rise in electric vehicle adoption, even though it narrowly missed its ambitious full-year goal of half a million deliveries during a punishing year for the global auto industry.
The report released on Wednesday showed registrations in California, a bellwether for the electric carmaker and its largest U.S. market, recovered from a third-quarter low of about 16,200 vehicles to around 22,117 vehicles in the three months ended December.
At about 11,417, registrations in the state for Tesla’s Model Y compact crossover utility vehicle surpassed those for the Model 3. California registrations for Tesla’s Model 3 mass-market sedan fell 34 per cent on a yearly basis to 7,044.
Pipeline operator Kinder Morgan Inc. (KMI-N) was down after it raised concerns over the pace of ramp-up in spending in top U.S. shale basins following a rebound in oil prices after beating Wall Street estimates for quarterly results.
Oil prices are now hovering around us$55 a barrel on vaccine rollouts, and in the week to Jan. 15, U.S. energy firms added oil and natural gas rigs for an eighth week in a row.
“By our calculations, you’re getting close to a rig level in the Permian that could get you back to flat volumes to where we were pre-pandemic,” Kim Dang, president at Kinder Morgan said at a post-earnings call.
“And so it’s not clear how much they would ramp up capex in response to increasing prices,” he added.
While Bakken is off to a good start for the year, Eagle Ford has still been weak, he said.
U.S. oil production peaked at nearly 13 million barrels per day (bpd) in late-2019, but is now around 11 million bpd after the coronavirus-induced lockdowns crushed fuel demand and oil prices.
Kinder Morgan, which transports nearly 40 per cent of the natural gas consumed in the United States, said natgas shipment volumes rose more than 6 per cent sequentially, while total refined product volumes fell marginally.
Excluding items, Kinder Morgan earned 27 US cents per share, versus estimates of 24 US cents, according to Refinitiv IBES data.
Revenue also rose sequentially to US$3.12-billion, above analysts’ estimates of US$3.05-billion.
United Airlines Holdings Inc. (UAL-Q) fell after it said it aims to cut about US$2-billion of annual costs through 2023 as it charts a recovery from the coronavirus pandemic that drove its fourth straight quarterly loss.
Airlines are counting on COVID-19 vaccines to boost travel demand later this year but warn that the strength of a rebound will largely depend on the pace of vaccine rollouts, particularly as coronavirus cases keep rising.
Chicago-based United said 2021 would be a “transition year that’s focused on preparing for a recovery.”
The company burned an average of US$33-million per day in the fourth quarter, including about US$10-million of severance and debt payments, even as it continued to slash costs.
United furloughed thousands of employees last October when an initial round of payroll aid for airlines expired. It brought back those workers following a fresh US$15-billion in payroll aid for the sector but warned the recall could be “temporary” as travel demand remains depressed.
United is set to receive about US$2.6-billion in payroll support through March and said it expects to offer employees options like voluntary leaves to reduce furloughs after that time.
Rival Delta Air Lines (DAL-N), which last week labeled 2021 a year of recovery, expects to halt its daily cash burn rate of about US$12-million in the spring and does not expect any furloughs.
United has the greatest exposure of major U.S. airlines to international travel, the sector hardest hit by the pandemic and the one likely to be the slowest to recover.
United’s adjusted net loss was US$2.1-billion, or a loss of US$7 per share, in the fourth quarter ended Dec. 31, compared with a profit of US$676-million a year earlier. That missed analysts’ estimates for a loss of US$6.60 per share, according to IBES data from Refinitiv.
With files from staff and wires