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A look at notable North American stocks that moved in both directions

On the rise

Pfizer Inc. (PFE-N) on Tuesday raised its forecast for annual sales of its COVID-19 vaccine by US$2-billion to US$34-billion on demand for Omicron-targeted boosters, helping allay some investor worries over growth for the vaccinations.

The U.S. drugmaker’s shares rose over 3 per cent as its third-quarter profit beat estimates, mainly due to better-than-expected sales of the vaccine.

Sales of the COVID-19 vaccine have eased from pandemic highs on soft demand for the original shots, sparking concerns over demand over the next few years.

In response, Pfizer plans to roughly quadruple the price of the vaccine, which it sells with German partner BioNTech , in the United States once the government stops buying doses and shifts to a private market.

“Our COVID-19 franchises will remain multi-billion-dollar revenue generators for the foreseeable future,” Chief Executive Officer Albert Bourla said in prepared remarks ahead of a conference call.

Meanwhile, Pfizer is also expected to face the loss of patents for some key drugs between 2025 and 2030. The company has turned to deals such as its recent US$5.4-billion acquisition of Global Blood Therapeutics Inc and its US$11.6-billion purchase of Biohaven to beef up its pipeline.

While some will point to the massive Comirnaty beat as unsustainable, “we’re not yet throwing in the towel given an emerging pipeline and significant balance sheet flexibility,,” said BMO Capital Markets analyst Evan Seigerman.

Third-quarter sales of the COVID-19 vaccine came in at US$4.40-billion, blowing past estimates of US$2.60-billion, according to five analysts polled by Refinitiv.

However, US$7.51-billion in sales of the company’s COVID-19 pill Paxlovid missed estimates of US$7.66-billion.

The company maintained its full-year sales forecast for Paxlovid at US$22-billion.

Pfizer earned US$1.78 per share in the third quarter, beating estimates of US$1.39.

Uber Technologies Inc. (UBER-N) on Tuesday forecast fourth-quarter operating profit above Wall Street estimates, betting on cost controls and rising demand for its rides as customers resume spending more on travel, sending its shares soaring by over 12 per cent.

With cities reopening and travel booming, consumers are shifting their budgets to services, Chief Executive Dara Khosrowshahi said, compared to the two years of COVID-led lockdowns when they had limited spending to basic needs.

“We’ve seen these trends continue into the fourth quarter, with October tracking to be our best month ever for both mobility and total company gross bookings,” he said as revenue in its rideshare segment rose 73 per cent in the third quarter.

The ride-hailing company, which had faced driver shortages during its recovery from pandemic losses, said active drivers are back to September 2019 levels as decades-high inflation push many to look for sources of additional income.

Uber, however, is also aiming to scale back hiring and reduce expenses to expand profitability amid macroeconomic uncertainties, with Mr. Khosrowshahi stressing the importance of “not taking anything for granted.”

“It is just more confirmation that this can be a very profitable business,” Fox Advisors CEO Steven Fox said, highlighting Uber’s goal of $5 billion in operating profit by fiscal 2024.

The company forecast fourth-quarter adjusted EBITDA, a profitability metric keenly watched by investors, between US$600-million and US$630 million. Analysts were expecting US$569.39-million, according to Refinitiv data.

Gross bookings, or the total dollar value from its services, is expected to grow between 23 per cent and 27 per cent compared to a 26-per-cent rise in the quarter ended Sept. 30.

Revenue rose 72 per cent to US$8.34-billion and adjusted profit was US$516-million, both beating estimates. However, quarterly loss came in at US$1.2-billion, mainly due to equity investments.

Shares of peers Lyft Inc. (LYFT-Q) and DoorDash Inc. (DASH-N), which are scheduled to report results later this month, were also higher.

Fox Corp. (FOX-Q) surged 5.2 per cent after it reported better-than-expected quarterly revenue on Tuesday, as the Fox News parent benefited from an uptick in advertising spend ahead of the U.S. midterm elections.

The company has been investing in growing its digital footprint, while also focusing on live news and sports. Fox Corp’s revenue was also buoyed by higher affiliate fees and an influx of advertisers to its Tubi streaming service.

Fox Corp is also deciding on whether to combine with News Corp after the companies said earlier this month that Rupert Murdoch had started a process that could reunite his media empire.

Fox Corp’s total revenue rose to US$3.19-billion in the first quarter ended Sept. 30, from US$3.05-billion a year earlier. Analysts were expecting US$3.17-billion, according to IBES data from Refinitiv.

Advertising revenue increased 8 per cent in the quarter, primarily due to higher political advertising revenue at its TV stations, the company said.

Net income attributable to shareholders fell to US$605-million, or US$1.10 per share, in the quarter, from US$701-million, or US$1.21 per share, a year earlier.

On an adjusted basis Fox earned US$1.21 per share.

On the decline

Thomson Reuters Corp. (TRI-T) was down 3.2 per cent as it kept its financial guidance for this year and next after a forecast-beating rise in third-quarter earnings on Tuesday, but warned any worsening of the economic outlook could impact its ability to meet targets.

The news and information company said its three biggest divisions - legal, tax and accounting, and corporates - had held up well to economic challenges so far, helped by a large proportion of long-term contracts in all three.

“Our results and our outlook speak to the resilience of our business,” Chief Executive Steve Hasker said in an interview, calling Thomson Reuters products essential and not discretionary spending for clients.

But looking into next year, he said the company was monitoring cost-related inflation - labour in particular - and said technology vendors had demanded “significant” price increases.

Thomson Reuters, which owns the Westlaw legal database and the Checkpoint tax and accounting service, made US$1.57-billion in quarterly sales, up 3 per cent, slightly below expectations of US$1.59-billion. Adjusted earnings per share came in at 57 US cents, 7 US cents ahead of estimates.

The company still sees sales growing 5.5 per cent to 6 per cent next year. But it noted 2023 margins were trending towards the lower end of the 39-40-per-cent guidance range amid heightened inflation and investments.

“The cost of labour is going up, and it’s a very big part of our cost base,” Mr. Hasker said.

The company’s three main divisions reported single-digit increases in quarterly sales, as did the Reuters News division.

Reuters News makes about half its revenue from supplying Refinitiv, a data company spun off from Thomson Reuters and now owned by the London Stock Exchange Group (LSE). Thomson Reuters holds a minority stake in the LSE, worth about US$6.3-billion as of Friday.

Mr. Hasker said valuations on potential acquisition targets were down 25 per cent from their peak, calling these businesses - especially in the company’s big three market segments - more reasonably priced. Thomson Reuters will be “quite a bit more aggressive in the next few quarters in looking at acquisitions,” he said.

The company will have an estimated US$12-billion of capital capacity between now and 2025 for deals, and will be able to continue the 10-per-cent annual dividend increase, chief financial officer Mike Eastwood said.

Newmont Corp. (NGT-T) was down 1.3 per cent on Tuesday despite reporting a weaker-than-expected third-quarter profit as the world’s biggest gold miner was hurt by lower gold prices, higher input costs and a tight labor market.

Gold prices were down 8 per cent in the quarter, their worst since March 2021, primarily driven by hawkish interest-rate hikes by central banks around the world in the face of unrelenting inflation.

The miner said its third-quarter gold production rose to 1.49 million ounces from last year’s 1.45 million ounces, primarily due to higher ore grade milled at Ahafo, Akyem and Boddington mines. However, its realized gold price fell by US$87 to US$1,691 per ounce of gold.

All-in sustaining costs (AISC) for the quarter, an industry metric that reflects total expenses, rose to US$1,271 per ounce from US$1,120 per ounce.

The company’s adjusted profit fell to US$212-million, or 27 US cents per share, in the quarter ended Sept. 30, from US$483-million, or 60 US cents per share, a year earlier.

Analysts on average had expected income of 36 US cents per share.

Newmont also reaffirmed its 2022 outlook.

Shares of Gibson Energy Inc. (GEI-T) were lower by just over 1 per cent with the release of stronger-than-anticipated third-quarter results after the bell, driven by its marketing segment.

The Calgary-based company reported adjusted EBITDA of $149-million, easily exceeding the Street’s forecast of $133-million.

It also announced it has repurchased 1.2 million shares for $28-million in the third quarter plus an additional 0.4 million shares subsequent to the end of the quarter, for a total of 3.9 million shares this year for an aggregate $97 million, representing 2.7 per cent of outstanding shares.

Calling it a “solid beat,” Raymond James analyst Michael Shaw said: “Marketing EBITDA was $48-million, besting the $30-million guidance provide with 2Q results. The segment benefited from a combination of strong product margins at Moose Jaw and crude marketing opportunities that have not been available to GEI since 2019/early 2020. Crude marketing benefits from a wide range of differentials – time, location, and quality differentials – and the recent widening of Canadian heavy differentials combined with the strong distillate cracks drove the 3Q Marketing results.”

Colliers International Group Inc. (CIGI-T) slid 3.7 per cent with the release of weaker-than-anticipated third-quarter results before the bell.

The Toronto-based announced adjusted earnings per share of US$1.41, up from US$1.27 during the same period a year ago but below the Street’s expectation of US$1.64. Revenue of US$1.11-billion was narrowly higher of also fell short of the consensus forecast (US$1.07-billion).

Shares of Gatineau, Que.-based cannabis producer Hexo Corp. (HEXO-T) dipped 5.7 per cent after reporting net revenue of $42.5-million for its fourth quarter, up from $38.8-million a year ago but below the Street’s expectation of $44.8-million.

The company said its total net loss was $102.4-million in the quarter, which compared to a profit of $63.1-million a year ago.

ATB Capital Markets analyst Frederico Gomes said: “HEXO reported Q4/FY22 results (ended July 31, 2022) that were negative, with better-than-expected adj. EBITDA driven by significant one-time expenses and impairment adjustments. Net revenue came in below consensus, though it was slightly above our expectation, mostly driven by the recognition of $5.1-million of beverages revenue (which we had assumed would be recognized in the Truss JV from Q4/FY22 onwards). During the quarter, HEXO recognized several one-time expenses (e.g., $36.3mm impairment to excess inventories, $6.7-million write-off of inventory); as such, we believe the better-than-expected adj. EBITDA reported by the Company may not accurately reflect its fundamentals. While noisy, this quarter is in line with our bearish thesis on HEXO; we remain wary of HEXO’s capital structure and position, supported by the going concern warning in its financials.”

Johnson & Johnson (JNJ-N) lost ground after it said on Tuesday it would buy heart pump maker Abiomed Inc. (ABMD-Q) in a US$16.6-billion deal, its biggest in nearly six years, as the conglomerate seeks to boost its cardiovascular business.

The deal comes when J&J is spinning off its consumer health business to focus on its pharmaceuticals and medical devices operations.

Chief Executive Officer Joaquin Duato, who assumed charge in January, has said his priority was to be “more on the acquisitive side” for the medical devices unit, its second-largest business by revenue.

J&J’s offer of upfront payment of US$380 per share represents a 50.7-per-cent premium to Abiomed’s last closing price.

Abiomed shareholders will also get rights to receive up to US$35 per share in cash if certain commercial and clinical milestones are achieved.

Abiomed, which generated revenue of US$1.03-billion in fiscal year 2022, develops medical technology that provides circulatory and oxygenation support.

Founded in 1981, the company’s Impella heart pumps are the smallest in the world and have been used in the United States since 2008. Impella’s worldwide revenue totaled US$985-million in fiscal year 2022.

J&J said Abiomed will operate as a standalone business within the conglomerate’s medical technology division.

The deal, expected to close before the end of the first quarter of 2023, will add to adjusted earnings from 2024, the company said.

Eli Lilly and Co. (LLY-N) on Tuesday forecast its annual profit and revenue below estimates, as a stronger dollar piled more pressure on the drugmaker struggling with lower insulin prices and generic competition for its cancer drug.

The company’s shares fell 2.5 per cent as a forecast cut for the third time this year overshadowed strong performance by its newly approved diabetes drug.

Eli Lilly now expects adjusted full-year earnings of US$7.70 to US$7.85 per share, compared to its prior forecast of US$7.90 to US$8.05 and below analysts’ expectations of US$7.97.

The drugmaker also trimmed its full-year revenue forecast, citing a US$300-million hit to its revenue from the strong dollar. Lilly now sees revenue in the range of US$28.5-billion to US$29-billion, below analysts’ estimates of $28.76 billion at mid-point.

The company posted better-than-expected results for the third quarter, as demand for its recently approved diabetes drug, Mounjaro, helped counter declining sales of its diabetes and cancer treatments.

Mohit Bansal, an analyst at Wells Fargo, said a second straight quarter of strong Mounjaro sales is an encouraging sign as the drug’s launch has been promotion driven.

Investors are closely focused on Mounjaro’s uptake as it is expected to have blockbuster potential, especially if approved as a treatment for obesity.

With files from Brenda Bouw and wires

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