A survey of North American equities heading in both directions
On the rise
Shares of Brampton, Ont.-based MDA Ltd. (MDA-T) rose 1.7 per cent on the premarket announcement it has received a $250-million contract extension from the Canadian Space Agency (CSA) to continue supporting robotics operations on the International Space Station (ISS) from 2025 to 2030.
MDA says it will now fulfil robotics flight controller duties to support mission operations on the ISS.
Alaska Air Group (ALK-N) forecast current-quarter profit above estimates on Thursday as soaring travel demand drove expectations of a strong summer season, sending its shares up.
The airline, the operator of the Boeing (BA-N) plane that suffered a mid-air cabin blowout in January, also reported a smaller loss in the first quarter, despite a US$162-million impact from the more-than-two-week grounding of its 737 MAX 9 aircraft.
In an interview with Reuters on Thursday, CFO Shane Tackett said Alaska has deployed more of its inspectors at Boeing’s factories since the January incident to ensure the jetmaker produces the highest quality aircraft that it can confidently fly safely.
Alaska Air reported an adjusted loss of 92 US cents per share for the quarter ended March 31, compared with analysts’ average estimates for a US$1.05 loss, according to LSEG data.
“Thanks to thoughtful capacity planning, network optimization, and diligent cost control, we are well-positioned to carry our strong performance into the second quarter and beyond,” CEO Ben Minicucci said.
The Seattle, Washington-based airline would have reported an adjusted pre-tax profit of about US$5-million for the quarter, absent the groundings of its MAX 9 jets.
To address the financial damages, Alaska Air received US$162-million in initial cash compensation from Boeing, which has been excluded from its first-quarter results.
Alaska Air forecast a second-quarter profit of US$2.20 to US$2.40 per share, compared with estimates of US$2.12.
“The carrier’s unit revenue trends appear to be driving strength into the second quarter, and the full year itself,” Citi analyst Stephen Trent said in a note.
D.R. Horton Inc. (DHI-N) gained after it raised its forecast for full-year revenue on Thursday, as tight housing supply in the United States boost sales.
The largest U.S. homebuilder now expects full-year revenue in the range of US$36.7-billion to US$37.7-billion, compared with its prior forecast of US$36.0-billion to US$37.3-billion.
With the popular 30-year fixed mortgage rate hovering at about 7 per cent for months, U.S. homeowners who secured fixed rates below 5 per cent during an era of cheap debt remain unwilling to list their homes and upgrade amid high rates.
The ‘rate lock-in’ that such homeowners are enjoying has constrained sales of existing homes in the United States and forced buyers to turn to newly constructed homes.
It has been a tailwind for homebuilders, even at a time when high home prices have limited affordability.
The Texas-based homebuilder now expects full-year home deliveries in the range of 89,000 homes to 91,000 homes, above its prior forecast of 87,000 homes to 90,000 homes.
Net income for the largest U.S. homebuilder in the second quarter ended March rose to US$1.2-billion, or US$3.52 per share from US$942.2-million, or US$2.73 per share, a year earlier. It also came in above analysts’ average estimate of US$1.02-billion, or US$3.06 per share.
On the decline
Lithium Americas Corp. (LAC-T) declined over 30 per cent after it said early on Thursday that it would raise US$275-million to accelerate construction and development of the Thacker Pass lithium project in Nevada.
The company will sell 55 million shares for US$5 per share, Lithium Americas said, a month after the U.S. unveiled plans to lend it US$2.26-billion to build the project.
The project is expected to run at full capacity in 2028, aiming to eventually produce 80,000 metric tons per year. The company aims to extract lithium at Thacker Pass from a large clay deposit, something that has never been done before at commercial scale.
The loan, announced last month, is a key part of the Biden administration’s effort to reduce dependence on lithium supplies from China. The mine is slated to open later this decade and be a key supplier to General Motors.
Vancouver-based Lithium Americas said it would grant the underwriters of the public offering a 30-day option to purchase up to an additional 8.3 million shares, it said in a statement.
Shares of Lion Electric Co. (LEV-T) dropped 7.6 per cent on Thursday after it said it’s cutting about 120 jobs as part of a plan to reduce costs.
The Montreal-based maker of electric trucks and buses says the cuts are mostly Canadian employees in overhead and product development roles.
The move comes after the company announced that it was cutting more than 100 employees in February and 150 workers in November last year.
Lion Electric says it will have approximately 1,150 employees, after the cuts.
The company says it is also moving to reduce costs in areas such as third-party inventory logistics, lease expenses, consulting, product development and professional fees.
Lion Electric says the job cuts and cost reductions announced Thursday combined with the announcements in November 2023 and February this year are expected to result in annualized savings of about $40-million.
Memory chip maker Micron Technology (MU-Q) was lower in volatile trading after Senator Chuck Schumer said it is set to receive US$6.1-billion in grants from the U.S. Commerce Department to help pay for domestic chip factory projects.
The award, which is not yet finalized, will fund chipmaking facilities in New York and Idaho from the CHIPS & Science law, the senator said in a statement.
“This monumental and historic federal investment will power and propel Micron to bring its transformative $100+ billion four-fab project in central New York to life, creating an estimated 50,000 jobs,” said Senator Schumer.
New York Governor Kathy Hochul said in a statement that the largest private investment in American history is on its way to Central New York.
Micron plans to build a complex of chip plants in New York over the next 20 years, the senator said.
Over the past few months, Biden has announced several funding initiatives, including nearly US$20-billion in loans and grants for Intel and a US$1.5-billion grant to GlobalFoundries.
Tesla’s (TSLA-Q) stock tumbled below US$150 per share, giving up all of the gains made over the past year as the electric vehicle maker reels from falling sales and steep discounts intended to lure more buyers.
Shares in the Elon Musk-owned company slid 3.6 per cent in trading Thursday, in what now stands as the third worst week for the stock in 2024, a year that has been dismal for Tesla investors. The Austin, Texas company’s shares are down 12.4 per cent this week and more than 39 per cent this year.
Shares of Tesla Inc. last traded at the US$150 level in January 2023.
It’s also been a bad year for employees. Tesla said Monday that it was cutting 10 per cent of its staff globally, about 14,000 jobs. The next day, Tesla announced it would try to re-instate Mr. Musk’s US$56-billion pay package that was rejected by a Delaware judge in January, who said that the arrangement was dictated by Musk and was the product of sham negotiations with directors who were not independent of him.
At the time of the Delaware court ruling, Mr. Musk’s package was worth more than US$55.8-billion, but the stock slide has cut that to US$44.9-billion at the close of trading on Friday, according to a company filing this week.
Tesla shares hit an all-time intraday high of US$415.50 in November of 2021, adjusted for a 3-for-1 stock split that took effect in August 2022.
Tesla sales fell sharply last quarter as competition increased worldwide, electric vehicle sales growth slowed, and price cuts failed to draw more buyers. The company said it delivered 386,810 vehicles from January through March, nearly 9 per cent below the 423,000 it sold in the same quarter of last year.
Dan Ives, an analyst with Wedbush who has been very bullish on Tesla’s stock, called the first quarter sales numbers an “unmitigated disaster.”
“For Musk, this is a fork in the road time to get Tesla through this turbulent period otherwise dark days could be ahead,” Mr. Ives wrote this week.
Taiwan Semiconductor Manufacturing Company Ltd. (TSM-N), the world’s largest chipmaker and a major Apple and Nvidia supplier, was down despite forecasting second-quarter sales may rise as much as 30 per cent as it rides a wave of demand for semiconductors used in artificial intelligence (AI) applications.
The surging need for processors for AI left executives at Taiwan Semiconductor Manufacturing Co (TSMC), which investors watch closely as a bellwether for the chip industry, plainly stating just how strong the demand was.
“Almost all the AI innovators are working with TSMC to address the insatiable AI-related demand for energy efficient computing power,” CEO C.C. Wei said during the company’s first-quarter earnings call.
“AI-related data centre demand is very, very strong,” he said, adding that the shift from traditional servers to AI servers is “favourable” to TSMC.
TSMC has benefited from the AI wave that has helped it weather the tapering off of COVID-19 pandemic-led electronics demand and pushed the company’s stock to a record.
AI servers are expected to account for a low-teens percentage of its 2024 revenue, more than double from last year, with that figure rising to more than 20 per cent of revenue by 2028, it said.
Demand for auto chips would fall this year, compared with a previous estimate of growth, it added.
Looking ahead, TSMC said it expects business in the second quarter to be supported by strong demand for its industry-leading 3 nanometre (nm) and 5nm technologies, although that strength would be partially offset by sluggish demand for smartphones.
It maintained its guidance for capital spending this year at US$28-billion to US$32-billion, compared with last year’s US$30.45-billion, and said 70-80 per cent of that would go towards advanced technologies.
For 2024, the company said it expects revenue to rise in the low- to mid-20-per-cent range in U.S. dollar terms.
“Looking at 2024, macro economy and geopolitical uncertainties persist, which could further affect consumer confidence and end-market demand,” TSMC said in a statement.
Earlier on Thursday, TSMC posted a -per-cent% rise in first-quarter net profit that beat market expectations, boosted by strong demand for advanced chips.
TSMC saw January-March net profit rise to T$225.5 billion (US$6.98-billion) from T$206.9 billion a year earlier.
The profit beat a T$218.1 billion LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate.
TSMC, Asia’s most valuable listed company, said first-quarter revenue rose 13 per cent year-on-year to US$18.87-billion, better than the company’s previous forecast of US$18-billion to US$18.8-billion. The company last week announced first quarter revenue in Taiwan dollars, coming in at T$592.64 billion.
The chipmaker, which is spending billions building new plants overseas including in the United States, Japan and Germany, said it was “strategically important” to expand its global manufacturing footprint and was on track for production in the U.S. state of Arizona in the first half of 2025.
The company announced last week it would expand its planned investment in chip production in Arizona by US$25-billion to US$65-billion and to add a third fabrication plant there by 2030.
Blackstone Inc. (BX-N), the world’s largest private equity firm, slipped after it said on Thursday that its first-quarter distributable earnings rose 1 per cent year-on-year supported by growth in fee-related earnings that was partly offset by a decline in income from asset divestments.
Distributable earnings, the cash used to pay dividends to shareholders, rose to US$1.27-billion compared with US$1.25-billion a year earlier. That translated to distributable earnings per share of 98 US cents, which was slightly higher than the average Wall Street analyst estimate of 96 cents, according to LSEG data.
Fee-related earnings, which Blackstone generates from lucrative management and advisory fees, rose 12 per cent to US$1.2-billion as strong fundraising helped its total assets under management remain just above the milestone US$1-trillion mark.
Blackstone’s net profit from asset sales fell 25 per cent to US$293.3-million as it cashed out fewer assets across its private equity and credit portfolios.
During the quarter, Blackstone’s opportunistic real estate funds were flat at 0.3 per cent, corporate private equity funds appreciated by 3.4 per cent, liquid credit funds gained 2.5 per cent and its hedge funds added 4.6 per cent. By contrast, the benchmark S&P 500 rose 10.2 per cent over the same period.
Blackstone’s net income under generally accepted principles (GAAP) surged to US$847.4-million, up from $85.8 million the previous year, as total revenues more than doubled driven by growth in management and performance fees as well as principal investments. Blackstone raised US$34-billion of new capital, while unspent capital reached US$191.2-billion. It declared a quarterly dividend of 83 US cents per share.
Infosys (INFY-N) fell after it reported lower-than-expected fourth-quarter revenue on Thursday, in a seasonally weak period for India’s No.2 IT services provider, as cautious clients curtailed spending amid macroeconomic uncertainties.
Infosys reported revenue growth of 1.3 per cent on-year at 379.23 billion rupees (US$4.54-billion) in the January-March quarter, compared to analysts’ expectation of 386.24 billion rupees as per LSEG data.
For fiscal year 2025, Infosys forecast revenue growth between 1 per cent and 3 per cent in constant currency.
India’s US$254-billion IT sector has been struggling in recent quarters as clients cut spending on non-essential projects amid inflationary pressures.
This has led companies to accept tougher contract terms to win large deals, while grappling with clients renegotiating, delaying or cancelling contracts, resulting in a sharp slowdown in the industry’s growth from the pandemic-fuelled boom a few years back.
Infosys’ consolidated profit rose 30 per cent to 79.69 billion rupees.
Tata Consultancy Services, India’s top IT services provider, said last week that weak spending continued to be an overhang, as it reported lower-than-expected fourth-quarter revenue due to subdued growth in its biggest vertical and largest market.
With files from staff and wires
David Leeder