A roundup of some of the North American equities making moves in both directions today
On the decline
Shares of Aphria Inc. (APHA-T) erased early gains and closed down 1 per cent on Tuesday after it announced before the bell that it has received its European Union Good Manufacturing Practices certification for its medicinal products for human use and investigational medicinal products for human use, from the Malta Medicines Authority.
“We believe that this is a game changer for Aphria Inc. and will significantly advance our leadership in permissible medical cannabis markets across Europe, where demand for product is strong,” said CEO Irwin Simon.
Halliburton Co. (HAL-N) lost 0.7 per cent despite the oilfield service provider disclosed a US$2.2-billion charge to earnings as weakening North American shale activity continued to hit the industry.
The charge for asset impairments was centered on hydraulic fracturing and legacy drilling equipment units, as well as workforce reductions, the company said. It dismissed 8 per cent of its North American staff at mid-year, and later cut its workforce across several western U.S. states.
Chief Executive Jeff Miller said in a statement he expected customer spending in North America to decline again this year. The company expects to recognize US$50-million of the charges in the current quarter, according to a press release.
Spin Master Corp. (TOY-T) slid 2.7 per cent after announcing before the bell it expects gross product sales for 2019 to fall 1 per cent from a year earlier due to soft toy sales during shortened holiday-shopping season.
Excluding the impact of foreign exchange, it expects sales to be flat. The company’s previous guidance, issued in November, had forecast growth in the low single digits. “
Our overall performance in the fourth quarter and for 2019 as a whole, was disappointing relative to our outlook in early November," Ronnen Harary, Spin Master’s Co-Chief Executive Officer, said in a statement.
The Calgary-based company revealed that its 2020 exploration and development capital budget will be between $520-million to $570-million, down from $625-million in 2019.
AltaCorp Capital analyst Patrick O’Rourke said: “We view the event as neutral-to-modestly positive, with headline production 6 per cent below prior consensus (8 per cent below our prior estimate), but oil production in-line with expectations. On the positive end, improving capital efficiencies led to capital spend that was 13 per cent below consensus expectations, which improves our 2020 FCF [free cash flow] estimate from $103-million to $129-million (and the Company estimating FCF breakeven at US$50/bbl WTI). Overall, the messaging from the Company continues to be the same as in 2019, with a focus on oil growth in the Bakken enhanced by NCIB execution. Given the strength of the balance sheet (0.8 times estimated 2020 D/CF), ERF is in an enviable position that allows it to execute on its NCIB when opportunistic, rather than needing to match the cadence of FCF throughout the year, which will provide some downside protection to investors in 2020.”
First Majestic Silver Corp. (FR-T) fell over 2 per cent with the release of its 2020 production and cost guidance before the bell.
“For 2020, our focus remains on adopting new innovation projects to modernize our processing plants to achieve higher recoveries, improve efficiencies and reduce operating costs,” said CEO Keith Neumeyer. “We have witnessed significant benefits from high-intensity grinding at our Santa Elena operation in 2019 and we plan to install the same technology at San Dimas in 2020. In addition, we continue to advance underground development activities at the Ermitano project near Santa Elena to prepare the mine for initial production in early 2021. Our increased investments in underground development and innovation in 2020 is expected to result in significant production growth in 2021 and beyond.”
Baytex Energy Corp. (BTE-T) was down 2.8 per cent after it announced preliminary results for its fourth quarter ended Dec. 30 including revenue of $428-million and adjusted funds flow of $232-million. Analysts are expecting revenue of $387.9-million for the quarter.
For the same quarter a year earlier, the company reported revenue of $358.4-million and adjusted funds flow of $110.8-million.
AltaCorp Capital analyst Patrick O’Rourke said: “ Overall, we view the event as positive and expect a positive market reaction, given the Q4/19 cash flow beat relative to street expectations and a reserve report that produced an impressive 2.3 times PDP recycle ratio (one of our preferred gauges of evaluating business execution and reserve quality).”
Boeing Co. (BA-N) fell 3.3 per cent after announcing thatit does not expect to win approval for the return of the 737 MAX to service until mid-year due to further potential developments in the certification process and regulatory scrutiny on its flight control system.
Boeing said it has informed airlines and suppliers of the new estimate, which is longer than previous forecasts and also takes into account new anticipated pilot training requirements.
The Chicago-based planemaker has been updating the 737 MAX flight control system and software to address issues believed to have played a role in two crashes in Indonesia and Ethiopia that killed 346 people within five months.
Walt Disney Co. (DIS-N) declined 0.5 per cent despite revealing it’s moved up the launch of its video streaming service, Disney+, to March 24 in the United Kingdom and regions across Western Europe by a week, ahead of its earlier launch schedule of March 31.
Disney+ would be available in the U.K. and Ireland for 5.99 pounds (US$7.81) per month or 59.99 pounds every year, and in France, Germany, Italy, Spain, Switzerland and Austria for 6.99 euros (US$7.76) per month or 69.99 euros annually.
With files from Terry Weber, Brenda Bouw and wires