A roundup of some of the North American equities making moves in both directions today
On the rise
Auto parts maker Magna International Inc. (MG-T) was higher on Thursday after it beat estimates for quarterly profit and revenue driven by strong demand for car structures in China, which is leading the sector’s recovery from the COVID-19 crisis.
While light vehicle production surged 87 per cent in China, it was flat in North America and increased 5 per cent in Europe, the company’s two largest markets.
But the recovery is being threatened by a global chip shortage that has hit auto production in North America and Europe, forcing car makers to shut factories and incur billion of dollars in costs.
The company cautioned it could face issues while accessing some critical materials such as chemicals for seating foam and resins for plastic components, besides saying the semiconductor crunch would continue to have an impact through the remainder of 2021.
Semiconductors are used extensively in cars, for everything from engine performance monitoring to parking sensors.
Magna, which makes parts such as body structures, chassis and powertrain for customers including Ford Motor and Volkswagen, slightly lowered its full-year estimates for light vehicle production in North America that is grappling with material shortages as the region eases out of the health crisis and economic recovery picks pace.
Also, auto parts maker Dana Inc last week warned it was seeing a more meaningful impact from the chip constraint during the second quarter in its light vehicle business.
CFRA Research analyst Garrett Nelson, however, remained optimistic about Magna’s prospects as the global markets electrify.
“Partnerships with upstart EV manufacturers such as Fisker and demand for its new electrification-focused products represent a source of potential upside,” Nelson wrote in a note.
Magna marginally raised its full-year revenue forecast to $40.2 billion-$41.8 billion, from its prior expectation of revenue between $40.0-billion to $41.6-billion.
Adjusted earnings of $1.86 per share was above analysts’ expectation of $1.57, according to Refinitiv.
Tourmaline Oil Corp. (TOU-T) increased after reporting positive net income in the first quarter thanks to higher oil and gas prices and a 33-per-cent increase in production from acquisitions as well as an active drilling program.
The Calgary-based company says it had net income of $248-million or 83 cents per share in the three months ended March 31, compared with a loss of $35.8-million or 13 cents a share in the same period of last year.
Analysts had expected net income of $207-million or 70 cents per share, according to financial data firm Refinitiv.
Tourmaline says first-quarter production averaged 411,600 barrels of oil equivalent per day (nearly 92,000 barrels per day of oil and liquids), noting stronger-than-expected well performance boosted its March output to 417,800 boe/d.
Production was 308,300 boe/d in the first quarter of 2020.
Its full-year production guidance calls for an average of between 390,000 and 410,000 boe/d with a capital budget of $1.075-billion.
Tourmaline closed deals to buy two private producers, Modern Resources Inc. and Jupiter Resources Inc., in the fourth quarter of 2020, adding 76,000 boe/d of output for a total of about $526-million in cash and shares.
Canadian Natural Resources Ltd. (CNQ-T) rose after announcing a better-than-expected quarterly profit on Thursday, buoyed by higher oil prices as COVID-19 vaccine rollouts lifted demand.
Crude prices have staged a steady recovery this year from pandemic-driven lows in 2020, and Canadian producers also benefited from the provincial government of Alberta lifting mandatory output cuts late last year.
The company, which operates in Alberta, northeastern British Columbia and Saskatchewan, said average realized crude prices jumped nearly 30 per cent to $52.68 per barrel from the prior quarter.
However, Canadian Natural stuck to its previous full-year production target of 1.19 million barrels of oil equivalent per day (boepd) to 1.26 million boepd.
The company said it now expects to generate between $5.7-billion and $6.2-billion in free cash flow in 2021, up from a prior forecast of $4.9-billion to $5.4-billion.
“As the global vaccine distribution increases and crude oil demand recovers, especially in the United States, we are seeing improved commodity pricing”, Canadian Natural said.
On an adjusted basis, it earned a profit of $1.03 per share, in the quarter ended March 31, while analysts on average expected a profit of 84 cents per share, according to Refinitiv data.
Toronto toymaker Spin Master Corp. (TOY-T) jumped in Thursday trading after its first-quarter results exceeded expectations.
After the bell, it reported revenue of US$316.6-million, up 39.3 per cent year-over-year and above the Street’s US$273.1-million projection. Earnings per share of 3 US cents also blew past the consensus estimate (a 9-US-cent loss).
Spin Master now expects revenue to increase by low double digits year-over-year.
Calling it an “exceptionally strong” quarter, Scotia Capital analyst George Doumet said: " The beat vis-a-vis our estimates was largely the result of much stronger than expected top line growth with GPS, digital games and entertainment and licensing revenues all coming in well ahead of expectations. Additionally (and more importantly), TOY raised their 2021 guidance, and are now calling for: (i) GPS to increase high single digits (vs. low-to-mid single digits previously), (ii) total revenue to increase low double digits (vs. mid-to-high single digits previously),
(iii) and adj. EBITDA margin to be in the high end of its mid-to-high teens range.”
PayPal Holdings Inc. (PYPL-Q) surged after it reported its strongest first quarter on record and beat profit estimates on Wednesday, with a coronavirus-driven shift to online shopping and digital transactions boosting payment volumes.
PayPal’s quarterly performance builds on an equally strong 2020 for the company, which also saw record levels of payment volumes.
San Jose, California-based PayPal processed a total of US$285-billion in payments in the first quarter, up 50 per cent from a year earlier, and added 14.5 million net new active customers.
“Our strong first-quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy,” Chief Executive Officer Dan Schulman said in a statement.
The company has been among the big winners of the pandemic as more people used its payment services to shop online and pay bills while staying indoors during the health crisis.
Visa Inc, the world’s biggest payment processor, is emerging from the COVID-19 pandemic, its top boss said last month, helped by a surge in online shopping.
Venmo, PayPal’s app which allows individuals in the United States to send each other money, processed $51 billion in payments in the quarter, up 63 per cent.
PayPal also said it expects to add 52–55 million net new active accounts in 2021, with an about 30-per-cent rise in total payments volume on a spot and forex neutral basis.
The company in February forecast an addition of about 50 million active users in 2021.
It also expects annual revenue and diluted earnings per share ahead of analyst estimates, according to Refinitiv IBES data.
PayPal reported first-quarter net income of US$1.22 per share, beating analysts’ average estimates of US$1.01 per share.
Revenue also beat estimates, rising 31 per cent.
On the decline
Manulife Financial Corp. (MFC-T) and Sun Life Financial Inc. (SLF-T) both fell after they reported increased core profits from a year ago after the bell on Wednesday, driven in part by business growth and improved earnings across all major business units.
But while Manulife beat analyst expectations for the quarter ended March 31, Sun Life missed estimates.
Payouts globally have risen due to claims related to the coronavirus pandemic, but strength in stock markets has helped soften some of that impact. Earnings of Canada’s top two insurers were affected by steepening yield curves in North America.
While it tempered Sun Life’s results, the No. 2 insurer still saw reported profit more than double from a year ago as a result of favorable equity markets and interest rate changes.
Sun Life also took an after-tax restructuring charge of $57-million related to changes it is making to its workspace, the company said.
Manulife reported core earnings of $1.6-billion, or 82 cents a share, in the three months ended March 31, from $1-billion, or 51 cents, a year earlier. Analysts had expected 77 cents.
Sun Life reported underlying profit of $850-million, or $1.45cents a share, in the three months ended March 31, from $770-million, or $1.31, a year earlier. Analysts had expected $870.8-million or $1.46 a share.
Cineplex Inc. (CGX-T) dropped in the wake of saying it lost $89.7-million in its latest quarter as a majority of its theatres remained closed or under strict operating restrictions.
The company says the loss amounted to $1.42 per diluted share for the quarter ended March 31.
The result compared with a loss of $178.4-million or $2.82 per diluted share a year ago when it took $173.1-million in non-cash impairment charges at the start of the pandemic.
Revenue totalled $41.4-million, down from $282.8-million in the first three months of 2020.
The plunge came as theatre attendance totalled 415,000 in its most recent quarter compared with 10.7 million people a year earlier and box office revenue fell to $3.8-million from $111 million a year ago.
The movie theatre company reached a deal with its lenders earlier this year to further amend its credit agreement and completed a sale-leaseback of its head office in Toronto in a bid to help its finances.
Bombardier Inc. (BBD-B-T) was down after it reported a 43-per-cent increase in quarterly adjusted profit on Thursday and used less free cash, helped by a recovery in business aviation, as rising COVID-19 vaccinations encourage travel.
It expects improved revenue this year from business aircraft activities over 2020 as the vaccination roll-out in the United States, the world’s largest market for corporate aircraft, boosts travel demand.
Chief Executive Éric Martel told analysts that aircraft pricing would be in line with what was expected or even slightly better. A rebound in U.S. business aviation traffic to pre-pandemic levels is expected to help boost growth in higher-margin aftermarket services.
Bombardier also disclosed it had been contacted by the U.S. Department of Justice over decade-old airplane deals in Indonesia, widening a separate British corruption probe.
Montreal-based Bombardier has emerged as a pure-play business jet maker after divesting assets, including its rail business to Alstom in January, to pay down debt.
Bombardier previously announced early results on Monday after contesting a bondholder’s claims that its recent sales of non-core assets breach the terms of certain notes.
Free cash flow usage, a metric closely watched by investors, improved by $357-million year-over-year, Bombardier said.
“Our objective is to sequentially improve free cash flow over the next three quarters,” said Bombardier Chief Financial Officer Bart Demosky.
In a research note, Desjardins Securities analyst Benoit Poirier said: “From a trading standpoint, we expect a neutral reaction given results were already pre-released. That said, while indebtedness remains too high, we are encouraged by the decent book-to-bill ratio and the performance of the aftermarket services business (now virtually back to pre-pandemic levels).”
Moderna Inc. (MRNA-Q) raised its 2021 sales forecast for its COVID-19 shot by 4.3 per cent to US$19.2-billion on Thursday, reflecting demand from countries looking to return to normalcy through rapid vaccine rollouts.
However, Moderna shares along with other global vaccine makers fell following U.S. President Joe Biden’s decision to support a waiver of intellectual property rights for COVID-19 vaccines.
While the move is aimed at increasing vaccine availability in poorer countries, it could potentially hit sales of COVID-19 vaccines.
Chief Executive Stéphane Bancel said the company could sign more deals with countries for supply of the vaccine in 2022 than in 2021.
Deals for “booster” doses, nations looking to stock up supplies for 2022 and beyond and a likely authorization for use of the vaccines in kids have led Moderna and its larger rival Pfizer to ramp up their supplies. Moderna said an initial analysis of a study in adolescents aged 12-17 years showed an efficacy rate of 96 per cent for its vaccine.
The company has also been working on a new version that could extend the time the vaccine can be stored in refrigerator temperatures, making it easier to distribute, especially in lower-income countries.
Earlier this week, Pfizer (PFE-N) raised its full-year forecast for the COVID-19 vaccine it developed with Germany’s BioNTech to $26 billion.
AutoCanada Inc. (ACQ-T) declined in the wake of the release of better-than-anticipated first-quarter results.
After the bell on Wednesday, the Edmonton-based company reported revenue of $969.8-million, up 37 per cent year-over-year and in line with the Street’s expectations. Adjusted EBITDA of $38.7-million blew past the consensus estimate of $29.8-milion.
“The company remains well positioned to deliver on M&A which they have highlighted as a priority over the near to medium term along with build out of the Digital Platform,” said Acumen Capital analyst Trevor Reynolds in a note.
Uber Technologies Inc. (UBER-N) was lower signaled it would pay drivers more to get cars back on the road as the U.S. economy recovers from the pandemic and disclosed a US$600-million charge to provide UK drivers with benefits, a sign of the potential costs if the United States requires more driver compensation.
The stock fell 3.4 per cent on Wednesday after the Biden administration blocked a Trump-era rule affecting gig workers.
The cost and speed of business recovery is of paramount interest to investors, and Uber executives on Wednesday said the take rate, the share Uber takes in fees from each ride, would drop from the previous quarter to a 20-per-cent range. Taking a lower cut will allow Uber drivers to earn more, but weigh on Uber’s second-quarter mobility revenue and profitability.
Atlantic Equities analyst James Cordwell said shares fell after hours because of the pressure on the take rate and implicit driver incentives.
The food-delivery business continued to grow in the first quarter, but ride-hail bookings were flat from the previous quarter.
Moreover, the ride-hailing mobility business had to absorb a US$600-million hit to account for a settlement with its more than 70,000 UK drivers and provide them with more benefits.
“The company’s bottom line has been hurt by the ruling in the UK which raised expenses and reminded investors that a similar move in the U.S. could have a much bigger impact,” said Haris Anwar, senior analyst at Investing.com.
Uber posted an adjusted US$359-million first-quarter loss before interest, taxes, depreciation and amortization - a metric that excludes one-time costs, including stock-based compensation, narrowing losses by nearly US$100-million from the previous quarter.
Analysts on average had expected the company to report an adjusted EBITDA loss of around US$452-million, Refinitiv data showed.
Excluding the US$600-million charge, Uber reported US$3.5-billion in first-quarter revenue, ahead of an average analyst estimate for US$3.29-billion, according to Refinitiv data.
Uber and Lyft’s shares took a tumble last week when U.S. Labor Secretary Marty Walsh told Reuters in an interview that “a lot of gig workers should be classified as employees.”
Uber Chief Legal Officer Tony West on a Wednesday conference call said the company was hopeful it will have a dialog with the Biden administration Labor Department that “can ultimately lead to a resolution.”
The gig companies rely on low-cost flexible workers and say their services would become unavailable if workers were reclassified as employees.
With files from staff and wires