A roundup of some of the North American equities making moves in both directions
On the rise
Shares of BRP Inc. (DOO-T) was higher on Thursday with the premarket release of fourth-quarter 2021 results and 2022 guidance that blew past expectations on the Street.
The Quebec-based recreational vehicle maker reported revenue of $1.815-billion, up 12 per cent year-over-year and ahead of the consensus projection of $1.796-billion. Normalized fully diluted earnings per share of $1.82 topped analysts’ forecast of $1.70.
For 2022, BRP is targeting normalized EPS guidance of $7.25–8.00, versus the $5.85 estimate on The Street.
It also raised its quarterly dividend by 18 per cent to 13 cents per share.
Desjardins Securities analyst Benoit Poirier said: “We expect the stock to react positively this morning given the solid 4Q results, 18-per-cent dividend increase, robust NCIB activity and impressive FY22 guidance which could potentially beat management’s FY25 objective.”
AstraZeneca PLC (AZN-Q) was higher with many countries resuming use of the Anglo-Swedish drugmaker’s vaccine after the European Medicines Agency (EMA) and the World Health Organization (WHO) said the benefits outweighed the risks following investigations into reports of blood clots.
Fresh data on Thursday showed the AstraZeneca vaccine was 76 per cent effective in preventing symptomatic coronavirus infections in a new analysis of its U.S. trial.
A Ukrainian servicewoman who died two days after taking the Covishield - the vaccine made by AstraZeneca partner Serum Institute of India - had not complained of any ill effects after taking the shot, the health ministry said on Wednesday. A poll on Sunday showed European trust in the vaccine had plunged.
At least 17 countries had suspended or delayed use after reports of hospitalizations with clotting issues and bleeding, while Asia is accelerating inoculations.
Debt-ridden Ovintiv Inc. (OVV-T) closed higher after it said it will sell its Eagle Ford assets in Texas to Validus Energy for US$880-million, as the oil and gas producer seeks to shore up its finances following a tumultuous year for the energy industry.
Ovintiv moved its headquarters from Canada to the United States in 2020 in the hopes of better access to capital. But a pandemic-driven crash in oil prices last year pushed away investors from the shale industry, forcing companies to look at asset sales and mergers for survival.
Oil prices have recovered since as OPEC and its allies made record output cuts.
With crude prices well above their 2020 lows, “there is a pool of private-equity backed companies looking for opportunities in lower growth” oilfields including the Eagle Ford in south Texas and Bakken in North Dakota, said Enverus M&A analyst Andrew Dittmar.
The $880-million price by Validus, headed by Felix Energy founder Skye Callantine, was higher than the combined value of all transactions in the Eagle Ford shale basin in 2020, Dittmar said.
Chipotle Mexican Grill Inc. (CMG-N) gained after it said on Thursday it has invested in autonomous technology company Nuro as part of the startup’s latest funding round, a move that would help the restaurant chain bolster its delivery network.
The investment by Chipotle in the SoftBank-backed Nuro was part of a series C funding round, led by T. Rowe Price Associates, where the startup raised US$500-million.
The companies did not disclose the terms of the investment.
Nuro, which uses Prius cars outfitted with its self-driving technology to deliver groceries and prescriptions for Kroger , Walmart and CVS in Houston, late last year got the first-ever permit to commercially deploy its self-driving vehicles in California.
Early in 2019, Nuro raised US$940-million from SoftBank and a source close to the company had said the valuation doubled from this last funding round to US$5-billion.
For the fast-casual chain, the investment in Nuro builds on its already strong digital operations that have been a standout in the industry during the COVID-19 pandemic and has helped Chipotle ride out the worst of the impact.
On the decline
Turquoise Hill Resources Ltd. (TRQ-T) was lower on news the largest minority shareholder in its Mongolian copper project Oyu Tolgoi has filed a class action lawsuit in New York, claiming the Rio Tinto, its biggest shareholder, concealed massive cost overruns and delays.
Rio Tinto said on Thursday that the lawsuit is without merit.
Rio operates the mine via its Canadian subsidiary, which owns 66 per cent of Oyu Tolgoi. The rest of the mine has been owned by the Mongolian government since the project was launched in 2009.
Activist investor Pentwater Capital Management LP is Turquoise Hill’s largest shareholder after Rio with a 9 per cent stake.
In its class action complaint filed in the United States District Court for the Southern District of New York on March 16, Pentwater said that senior executives of Rio Tinto and Turquoise Hill “repeatedly assured investors that progress on that development was on plan and on budget and that the deadline for achieving sustainable first production when the mine would begin generating cash flows remained intact.”
Chicago-based cannabis operator Cresco Labs Inc. (CL-CN) was lower despite its fourth-quarter financial results, released before the bell, beating the Street’s expectations.
Adjusted EBITDA of $49.9-million topped the consensus projection of $47.5-million, driven by better-than-anticipated revenues (up 292.2 per cent year-over-year to $162.3-million) and gross margin expansion.
ATB Capital Markets analyst Kenric Tyghe said: “The revenue growth in quarter reflected strong market growth in Cresco’s key states (we expect that Cresco’s growth in Illinois lagged that of the market given its retail footprint and high existing shelf space share in the broader market), and the Company’s 19 stores that were opened for Q4/20, which generated retail revenues of $68.8-million.”
The Montreal-based company , which makes equipment to produce renewable natural gas and renewable hydrogen, reported revenue and earnings per share of $6.4-million and a loss of 26 cents, respectively. The Street’s forecast was $11.1-million and an 18-cent loss.
““Despite positive developments in certain segments and acquisitions that we believe position us well for the future, 2020 was a challenging year for Xebec’s financial results as a result of different factors, including the negative impact of COVID-19,” said CEO Kurt Sorschak. “Going forward, several changes have been put in place to ensure that the issues we encountered in 2020 do not reoccur. These changes include adjusting our quote templates to better account for risks associated with installation activities, launching our standard containerized biogas upgrading system called BGX Biostream, which offers more predictable production and installation costs, and changes to our project management practice to better anticipate future cost increases. Furthermore, as a result of its graduation from the TSX Venture to the main TSX exchange in January 2021, Xebec has been working with external consultants to implement internal controls at the level required for non-venture issuers in the required transition timeframe, to enhance our systems and process to better support our growth globally.”
Nike Inc. (NKE-N) dipped as controversy erupted on Chinese social media late on Wednesday after China’s netizens spotted a statement from the sporting goods giant saying it was “concerned” about reports of forced labour in Xinjiang and that it does not use cotton from the region.
Topics around the Nike statement were among the highest trending on China’s Twitter-like social media Weibo on Thursday, and the social media backlash had a wider fallout.
Popular Chinese actor Wang Yibo terminated his contract as a representative for Nike in response to social media criticism over the company’s Xinjiang statement, his agency said on Weibo on Thursday.
It was unclear when Nike had put out the statement, which did not have a date on it. Nike did not immediately respond to a request for comment.
“We are concerned about reports of forced labor in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR),” Nike said in the statement.
“Nike does not source products from the XUAR and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region.”
U.S.-listed shares of Baidu Inc. (BIDU-Q), Alibaba Group Holding Ltd. (BABA-N) and JD.Com Inc. (JD-Q) slid after the U.S. securities regulator adopted measures that would kick foreign companies off stock exchanges if they do not comply with U.S. auditing standards.
The move by the Securities and Exchange Commission (SEC) adds to the unprecedented regulatory crackdown in China on domestic technology companies, citing concerns that they have built market power that stifles competition.
The Holding Foreign Companies Accountable Act, signed into law by then-President Donald Trump in December, is aimed at removing Chinese companies from U.S. exchanges if they fail to comply with American auditing standards for three years in a row.
The rules also require firms prove to the SEC they are not owned or controlled by an entity of a foreign government and to name any board members who are Chinese Communist Party officials, the SEC said in a statement Wednesday.
With files from staff and wires