A roundup of some of the North American equities making moves in both directions today
On the rise
In December, London-based Endeavour tabled an informal all-stock proposal worth $2.5-billion that would have seen it pay a 13 per cent premium for Centamin.
Endeavour, which trades on the Toronto Stock Exchange, operates four mines in West Africa. Jersey-based Centamin operates a single gold mine in Egypt.
Endeavour had argued that Centamin would benefit from being part of a larger, and better diversified miner, and that the combined company would be more appealing to investors. Endeavour also claimed that it would be a better manager of Centamin’s Sukari mine, which has struggled to transition from open-pit mining to underground.
- Niall McGee
Delta Air Lines Inc. (DAL-N) rose 3.3 per cent after reporting before the bell a fourth-quarter profit that beat estimates, boosted in part by customers it gained from rival airlines’ 737 MAX cancellations and growing air travel demand.
Airlines that own Boeing Co.’s (BA-N) 737 MAX are cancelling more than 10,000 monthly flights in total as the aircraft remains grounded following two deadly crashes.
Delta does not operate the MAX, enabling it to expand its flight capacity and capture new customers, even as peers like Southwest Airlines Co. (LUV-N) have had to scale back.
Atlanta-based Delta’s net income rose 8 per cent to US$1.1-billion in the quarter to Dec. 31 from a year earlier. Adjusted earnings per share hit US$1.70, beating analysts’ expectations for US$1.40 per share, according to IBES data from Refinitiv.
Total operating revenue rose 7 per cent to US$11.4 billion.
JPMorgan Chase & Co. (JPM-N ) increased 1.1 per cent after posting a better-than-expected rise in quarterly profit on Tuesday, as strong results at its trading and underwriting businesses offset weakness in consumer banking.
Net income at the United States’ largest bank rose to US$8.52-billion, or US$2.57 per share, in the quarter ended Dec. 31, from US$7.07-billion, or US$1.98 per share, a year earlier. Net revenue rose 9 per cent to US$29.21-billion.
Analysts on average had expected the bank to earn US$2.35 per share on revenue of US$27.94-billion, according to Refinitiv data.
Citigroup Inc. (C-N) jumped 1.5 per cent in the wake of beat analysts’ estimates for fourth-quarter profit on Tuesday, boosted by growth in its credit card business and a jump in trading revenue.
North American branded cards, which account for a majority of consumer banking revenue, continued to be a bright spot for the bank, clocking double-digit revenue growth for the second straight quarter. Revenue grew 10% from a year earlier.
Citi has been leveraging its robust card business to help grow deposits by pitching checking and savings accounts to card holders.
Trading revenue rose nearly 31 per cent as markets steadied during the last three months of 2019. The gains were driven by a 49-per-cent surge in fixed-income trading that offset a 23-per-cent decline in equities trading, where weak performance in derivatives weighed on results.
Shares of Los Angeles-based Aecom were up 5.6 per cent.
Desjardins Securities analyst Benoit Poirier said: “Bottom line, we believe a combination with ACM would be positive for WSP assuming the transaction is properly structured. The combination would create one of the largest engineering services firms with combined net revenue of $13-billion. Meanwhile, we remain confident in WSP’s ability to unlock value from its M&A strategy considering management’s track record (more than 100 acquisitions realized since IPO).”
Eli Lilly and Co. (LLY-N) rose 1.2 per cent in reaction to a Tuesday announcement that it plans to sell two versions of insulin at half their current list prices, eight months after it started selling a half-priced version of its popular Humalog injection.
Major insulin makers Lilly, Sanofi SA and Novo Nordisk have been pushing to make the life-saving diabetes medicine available for lower costs to counter heavy criticism from lawmakers and patients.
Insulin is used widely by diabetes patients to control high blood sugar, but its cost in the United States nearly doubled from 2012 to 2016, and stories have emerged of patients forced into sometimes brutal rationing of the medicine to allow them to work and survive.
Lilly in the past has called insulin a highly rebated product. Drugmakers often argue they have to keep prices high because of rebates or after market-discounts they must pay to pharmacy benefit managers and health insurers to get products on their lists of covered drugs.
On the decline
The company expects 2020 average production to be between 140,000 and 144,000 barrels of oil equivalent per day (boe/d), unchanged from a year earlier.
The company forecast 2020 capital expenditure of about $1.10-billion to $1.20-billion, lower than 2019 outlook of between $1.225-billion and $1.275-billion.
In a research note, AltaCorp Capital analyst Patrick O’Rourke said: “Overall, we view the event as neutral-to-positive, with both production and cash flow mostly in-line with [AltaCorp Capital] and street expectations. Capital spend guide was in-line with our expectation, but appears modestly higher than consensus, which we believe is skewed by accounting for the gas infrastructure disposition that closes in Q1/20. The budget remains on point with the main message to investors that the business will likely seek a flat production profile, maximize FCF and use those FCF proceeds to de-lever and repurchase shares.”
Aphria said it now expects net revenue for its 2020 financial year between $575 million and $625 million and adjusted earnings before interest, taxes, depreciation and amortization between $35 million and $42 million.
That compared with guidance in October for net revenue between $650 million and $700 million and adjusted earnings before interest, taxes, depreciation and amortization between $88 million and $95 million.
The revised forecast came as Aphria reported a net loss of $7.9 million or three cents per share for the quarter ended Nov. 30 compared with a profit of $54.8 million or 22 cents per share in the same quarter a year ago.
Wells Fargo & Co. (WFC-N) dropped 4.9 per cent after reporting a 55-per-cent slump in fourth-quarter profit on Tuesday, as the fallout from a sales scandal that erupted in 2016 drove the bank to set aside another US$1.5-billion toward legal expenses.
The lender is operating under heavy regulatory scrutiny, including an unprecedented cap on its balance sheet by the Federal Reserve, as it tries to rebuild its reputation since it was revealed that the bank had opened potentially millions of bogus accounts.
Since then, the fourth-largest U.S. bank by assets has paid billions of dollars in fines and penalties.
Net income applicable to common stock fell to US$2.55-billion, or 60 US cents per share, in the fourth-quarter ended Dec. 31, from US$5.71-billion, or US$1.21 per share, a year earlier.
Analysts had expected a profit of US$1.12 per share, according to Refinitiv data.
U.S. videogame retailer GameStop Corp. (GME-N) lost 13.3 per cent after it cut its fiscal 2019 outlook for profit and same-store sales as customers delayed console purchases ahead of new launches.
The company now expects full-year earnings to be below its prior forecast of between 10 US cents and 20 US cents per share and comparable store sales to decline between 19 per cent and 21 per cent compared with prior estimate of a drop in the high-teens.
“The accelerated decline in new hardware and software sales coming out of black Friday and throughout the month of December was well below our expectations, reflective of overall industry trends,” Chief Executive Officer George Sherman said in a statement
With files from staff and wires