A roundup of some of the North American equities making moves in both directions today
On the rise
Gibson Energy Inc. (GEI-T) jumped 5.5 per cent a day after releasing of better-than-anticipated quarterly results.
In response to the results, an equity analyst at CIBC World Markets raised his rating for Gibson shares.
Robert Catellier said: “Recently eased production curtailments (for incremental production shipped by rail) give us increased confidence in the infrastructure outlook. Higher marketing guidance helps too, but investors are more likely to pay up for the higher-quality infrastructure cash flow stream.”
Raymond James analyst Ben Cherniavsky said: “Toromont’s 3Q19 performance provides a clear illustration of why we view this stock as a solid long-term compounder. Despite challenging conditions in many key end markets, the company posted year-over-year EBIT and EPS growth of 15 per cent and 16 per cent respectively with 23-per-cent ROIC. The secret to this success, in our view, lies in a sharp focus on operational details and a strategy that emphasizes a culture of relentless ‘blocking and tackling’ in the business. Investors should not be blind to the cyclical nature of the end markets that Toromont serves or the valuation risks associated with the stock’s relatively high multiple. That said, we are still comfortable recommending the shares in a ‘buy and hold’ context. In particular, we remain bullish on the long-term value creation opportunity associated with the Hewitt acquisition, which continues to unfold very favorably for Toromont’s Equipment Group (EG). Additionally, Cimco offers investors some 'ice”-ing’ on thecake as its performance continues to improve.”
Nutrien Ltd. (NTR-T) was up 1.2 per cent despite missing third-quarter profit estimates and cut full-year earnings forecast on Monday, as it battled lower demand for its crop nutrients.
Agricultural companies have seen their profits hammered by harsh weather that delayed planting season in North America and a trade war fueled uncertainty that has crimped crop demand.
“Nutrien’s third-quarter results and fourth-quarter expectations are impacted by short term market softness. However, we believe that agriculture fundamentals are starting to strengthen and we expect 2020 to be a strong year for crop input demand for which we are well positioned to benefit,” Chief Executive Officer Chuck Magro said in a statement.
Separately, rival Mosaic Co also missed adjusted profit estimates due to lower prices for phosphate.
Nutrien, the world’s largest potash producer by capacity, lowered its annual potash sales volume forecast to 11.6 million tonnes to 12 million tonnes from a previous projection of 12.6 million tonnes to 13 million tonnes.
Adobe Systems Inc. (ADBE-Q) increased 4.3 per cent as the Photoshop software maker raised its fourth-quarter digital media annualized recurring revenue target.
Citi analyst Walter Prichard said: “Management has generally been conservative in forecasting, although increasingly less so in the last 12-18 months. This guidance will clearly raise expectations. We believe buy-side will assume $1.55-billion in NNARR guidance can ultimately produce $1.65-1.7-billion actual number. The implication is to drive out-year revenue higher with $150-million in NNARR (at illustrative 80-per-cent contribution margin) worth about $0.20 in EPS annually and $5-7/share at 30-35 times EPS. Given after hours move in the stock (4 per cent), shares likely price in maintenance of $1.65-1.7-billion in NNARR for 2 more years (through FY21).”
Shares of Xerox Holdings Corp. (XRX-N) were up 4.9 per cent after the photocopier maker said it will sell its 25-per-cent stake in Fuji Xerox, its joint venture with Fujifilm Holdings, for US$2.3-billion, after investor activism scuppered a deal involving the two companies.
Xerox, struggling with falling demand for office printing equipment, had agreed to a complex US$6-billion deal that would have merged the U.S. brand into Fuji Xerox and given Fujifilm control.
On the decline
Uber Technologies Inc. (UBER-N) fell 9.9 per cent after the ride-hailing service posted a bigger third-quarter loss as it tried to outspend competitors through discounts.
But the company promised it would be profitable by the end of 2021 as quarterly revenue beat expectations.
Uber Chief Executive Dara Khosrowshahi told journalists on a conference call that the company would achieve adjusted EBITDA profitability for the full year of 2021. The move follows a similar announcement by smaller ride-hailing competitor Lyft Inc. on Wednesday.
But Uber at the same time is spending heavily to expand into new business areas and is offering vast promotions to gain market share.
Uber’s costs jumped about 33 per cent to US$4.92-billion in the latest quarter. Gross bookings, which include ride-hailing, mobility, food delivery and freight payments before costs and other expenses, rose 29.4 per cent from a year earlier to US$16.47-billion.
RBC Dominion Securities analyst Mark Mahaney said: “:Bookings, Users and Trips all came in slightly below Street and all decelerated – mostly, large numbers law. Good news: Rides & Eats Take Rates improved, driving accelerating and slightly-above-Street Adjusted Net Revenue – mostly, industry is rationalizing, esp. U.S. Ridesharing. Great news: UBER’s EBITDA losses improved Q/Q (better than Street) and UBER now projecting EBITDA profitability in 2021, well before Street. And we think this is an achievable goal, given recent track record and what we have laid out as four key PTP (Path-to-Profitability) factors – pricing, rationalization, opex leverage, insurance leverage. So we are more constructive. November 6th lockup will come…and then go. Which creates Outperformance opportunity.”
Newmont Goldcorp Corp. (NGT-T) was down 3.5 per cent after missing Wall Street estimates for quarterly profit due to higher costs and the world’s biggest gold miner cut its annual output target on Tuesday as production remained suspended at one of its largest mines in Mexico.
The company said it expects attributable production for the year to be 6.3 million ounces, down from a prior forecast of 6.5 million ounces.
CIBC World Markets analyst Kevin Chiang said: “CJT is transitioning seamlessly from a volume-centric growth story to one with a more balanced earnings (margin expansion) profile and is positioned to generate structurally positive free cash flow (FCF) on all-in capex in 2020. CJT remains one of our preferred names given its competitive moat and earnings visibility.”
Generic drugmaker Mylan NV (MYL-Q) declined 9.8 per cent after it beat Wall Street estimates for third-quarter profit on Tuesday, benefiting from drug launches such as Wixela and Fulphila.
Mylan in July agreed to merge with Pfizer Inc.’s Upjohn unit that houses off-patent branded drugs, forming one of the largest companies selling low-cost prescription medicines.
The deal will allow Mylan to leverage a strong base in Asia through Upjohn, headquartered in China, a prime market for older drugs with high name recognition such as Pfizer’s cholesterol drug Lipitor and erectile dysfunction therapy Viagra.
Mylan on Tuesday narrowed its full-year profit forecast. The company now expects adjusted earnings per share at between US$4.20 and US$4.40, compared with its prior forecast range of US$3.80 to US$4.80.
Excluding items, it earned US$1.17 per share in the third quarter, beating analysts’ estimates of US$1.13, according to IBES data from Refinitiv.
goeasy Ltd. (GSY-T) dropped almost 3.5 per cent after announcing it generated a record $286 million of total loan originations in the third quarter, up 29 per cent from the $221-million in the third quarter of 2018.
Revenue for the third quarter increased to $156-million, up 20 per cent over the same period in 2018, “driven by the expansion of the consumer loan portfolio.” Analysts were expecting revenue of $155.8-million.
Raymond James analyst Brenna Phelan said: “We see goeasy as uniquely positioned to capitalize on opportunities in the non-prime consumer lending market, which features significant demand and little competition. We believe goeasy’s real competitive advantage is its consistent, reliable credit adjudication and underwriting, and think that recently announced partnerships provide good opportunity to leverage its underwriting skill within new, lower-cost customer acquisition channels. Although 3Q19 EPS were light vs. our forecast on lower loan growth, we believe that the growth opportunity continues to support management’s ambitious guidance through 2021.”
The Vancouver-based miner also said it was suspending its quarterly dividend.
Shake Shack Inc. (SHAK-N) slumped 20.6 per cent after missing third-quarter same-store sales estimates.
The burger chain reported growth of 2.0 per cent, which fell below the 2.5-per-cent expected on the Street.
With files from staff and wires