A roundup of some of the North American equities making moves in both directions today
On the rise
Brookfield Asset Management Inc. (BAM-A-T) increased 1 per cent after receiving the go-ahead from Brazilian antitrust regulator Cade for certain solar energy projects in the country’s northeast, according to a decision published in the government’s official gazette on Tuesday.
The solar power plants, to be built in the state of Ceará, will have total capacity to produce 278 MW of electricity, according to a description of the projects in Cade’s decision.
The move underscores Brookfield’s drive to expand its presence in Brazil’s electricity sector, where it operates hydro power dams, wind farms and electricity transmission assets.
Adjusted EBITDA is expected to be between $26-million and $31-million and its loss before income taxes is expected to between $69-million and $74-million. The company expects to report its fourth-quarter and year-end results on March 5.
Canaccord Genuity analyst John Bereznicki said: “In our view, this guidance reflects challenging fourth quarter fundamentals, and we continue to remain on the sidelines given Calfrac’s debt load and challenging North American pressure pumping fundamentals.”
Hudson’s Bay Co. (HBC-T) was flat after it issued a statement late Monday saying its special committee of the board reaffirmed its unanimous recommendation that the privatization transaction with a group of existing shareholders “is in the best interests of the company and fair to the company’s other shareholders.”
It received an updated valuation requested from its independent valuator, TD Securities Inc. and fairness opinions provided by J.P. Morgan, Centerview Partners LLC and TD Securities. The special committee recommends minority shareholders vote in favour of the transaction at the special meeting of shareholders to be held on Feb. 27.
Bombardier Inc. (BBD-B-T) rose 8.3 per cent after Germany scrapped a plan to buy Triton reconnaissance drones from Northrop Grumman and instead decided to buy three Global 6000 jets from the Quebec-based manufacturer.
The defense ministry told lawmakers in a confidential letter, obtained by Reuters, that the Triton drones would not be ready for delivery until 2025 as promised and that the estimated costs of some 2.4 billion euros ($2.66 billion) could not be financed.
Shares of Delphi Technologies Plc (DLPH-N) jumped 60.2 per cent after BorgWarner Inc. (BWA-N) said it was acquired the UK-based company in a US$3.3-billion deal, as the U.S. auto parts maker looks to expand in a growing market for hybrid and electric vehicles.
Delphi shareholders will receive 0.4534 shares of BorgWarner for each share held. That translates to US$17.39 per share, a premium of about 77 per cent to Delphi’s closing price on Monday.
BorgWarner, which saw its shares fell over 7.5 per cent, makes automotive parts including automatic transmissions, turbochargers, emissions systems and thermostats.
Delphi manufactures electronic control modules that manage various powertrain components and other auto parts.
Xerox Holdings Corp. (XRX-N), which is locked in a battle to take over HP Inc., was up 4.9 per cent after it posted a fall in quarterly revenue on Tuesday as more businesses digitized their paperwork, hurting demand for printers and photocopiers.
Total revenue fell to US$2.44-billion in the fourth quarter from US$2.50-billion a year earlier. Net income attributable to Xerox rose to US$818-million, or US$3.61 per share, in the three months ended Dec. 31 from US$137-million, or 56 US cents per share, a year earlier.
Lockheed Martin Corp. (LMT-N) was up 1.1 per cent after it forecast 2020 revenue above analysts’ estimates on Tuesday, as the Pentagon’s No.1 weapons supplier’s late 2019 results benefited from better jet and missile sales and heightened geopolitical tensions in the Middle East.
The company reported a better-than-expected quarterly profit on Tuesday and raised its 2020 revenue outlook to a range of US$62.75-billion to US$64.25-billion, beating analysts’ estimate of about US$62.61-billion.
U.S.-Iran tensions over the past few months have helped build momentum for defense purchases, benefiting Lockheed and other weapons makers, analysts have said. One business unit, Missiles and Fire Control, saw sales up 14 per cent in the quarter on higher volume for higher tactical and strike missiles.
United Technologies Corp. (UTX-N) rose 1.2 per cent after its Chief Financial Officer Neil Mitchill said he expects 2020 operating profit at the U.S. aircraft parts maker’s Collins Aerospace unit, its biggest, to be hurt largely due to the grounding of Boeing Co’s 737 MAX aircraft.
UTC forecast sales at the unit, which makes products such as avionics, cabin seating and lighting, to be hit by about US$550-million to US$600-million.
About US$225-million of the impact to its full-year operating profit is due to a divestiture and lower sales related to a surveillance technology that facilitates tracking of aircraft position during flight, Mr. Mitchill told Reuters.
“Rest relates to the 737 MAX,” Mr. Mitchill said, as UTC temporarily halted production of the aircraft parts earlier this month.
“We expect to be producing (parts for the 737 MAX) as we get into the second quarter, although at a significantly reduced rate, than where we were in 2019,” Mr. Mitchill said.
On the decline
The announcement came as Metro posted a profit of $170.2-million or 67 cents diluted in the latest quarter, compared with $203.1-million or 79 cents a year earlier. The previous year’s quarter included a gain from Metro’s sale of its investment in Colo-D Inc.
Superior Plus Corp. (SPB-T) was 7.4 per cent lower after announcing it has concluded that it is not in its shareholders’ best interests to proceed with a sale of its Specialty Chemicals business.
“Superior intends to continue to operate and invest in both the Energy Distribution and Specialty Chemicals businesses, growing the businesses organically and through strategic acquisitions,” the company said in a statement following the completion of a strategic review.
With that decision and saying it “continues to execute on its retail propane distribution tuck-in acquisition strategy,” Superior said it is restarting its dividend reinvestment and optional share purchase plan.
In a research note, Industrial Alliance Securities analyst Elias Foscolos said: “While the probability of a sale has been declining since year-end, we view this news as negative as investors may be disappointed. The Company has elected to reactivate its DRIP in order to continue further tuck-in acquisition’s, which could bring in $50-million at the cost of additional shares. We look forward to the Company’s upcoming presentation tomorrow and the Q4 results expected on February 20 to gain more color on their strategy moving forward.”
Hexo Corp. (HEXO-T) was down 1.1 per cent after it was revealed on Monday that it has been sued by Medipharm Labs Inc. (LABS-T) for the non-payment of $9.8-million related to shipments of marijuana resin.
In response to the news, an equity analyst downgraded Hexo shares before the bell.
Chemtrade Logistics Income Fund (CHE.UN-T) lost 4.7 per cent after it issued guidance late Monday, saying it expects 2020 adjusted EBITDA to range between $300-million and $350-million, below that of 2019.
“Generally, our businesses are performing well, but 2020 will be affected by a biennial turnaround at our North Vancouver chlor-alkali plant and by a once every five-year turnaround by a key refinery customer," stated CEO Mark Davis. "Also, while we are assuming near-term caustic soda weakness, we continue to believe that the long-term fundamentals for caustic soda, particularly in NE Asia remain favourable.”
Pfizer Inc. (PFE-N) sat 5.1 per cent lower after it posted a quarterly profit on Tuesday that came in below Wall Street estimates, as sales of breast cancer drug Ibrance fell short of expectations.
Under Albert Bourla, who took the helm at the start of last year, Pfizer has streamlined operations and announced plans to separate its off-patent branded drugs business, Upjohn, and combine it with generic drugmaker Mylan NV..
The company said it expects 2020 adjusted earnings per share to be in the range US$2.82 to US$2.92. Excluding Upjohn unit, it expects full-year adjusted earnings in the range US$2.25 to US$2.35 per share.
U.S. industrial giant 3M Co. (MMM-N) lost 5.7 per cent after it forecast 2020 profit below expectations and narrowly missed quarterly revenue estimates on Tuesday, as it continues to face sluggish demand in China.
3M, which makes everything from adhesive tapes to air filters, also said it would cut 1,500 jobs globally as it continues to restructure its businesses to boost growth.
Sales in Asia-Pacific fell for the fifth straight quarter, hurt by weak demand from China’s automotive and electronics sectors. It had forced the company to cut jobs and production last year.
China’s economic growth expanded at its slowest pace in almost three decades in 2019 amid a bruising trade war with the United States that hit factory production.
Sales in Asia-Pacific fell 1.7 per cent, while Europe, Middle East and Africa reported declines of 2 per cent. Sales in the United States rose 7.4 per cent.
Harley-Davidson Inc. (HOG-N) slid 3 per cent on Tuesday in the wake of reporting a larger-than-expected decline in its motorcycles revenue hurt by a continuing slide in retail sales in the United States.
The company said revenues at its motorcycles, parts & accessories and general merchandise segment fell an annual 8.5 per cent to US$874.1-million in the fourth quarter to end-December from US$955.6-million a year ago. Analysts surveyed by Refinitiv on average expected revenues to decline 3.7 per cent to US$920.14-million in the quarter.
U.S. oil and gas producer Hess Corp. (HES-N) slid 0.1 per cent after announcing before the bell it expects higher spending in 2020 as it looks to develop its assets in Guyana and Bakken shale play.
The company said its 2020 exploration & production capital and exploratory budget will be US$3.0-billion, higher than the estimated US$2.7-billion it allocated last year.
The company expects net production, excluding Libya, to average between 330,000 and 335,000 barrels of oil equivalent per day in 2020.
With files from Terry Weber, Brenda Bouw and wires