A roundup of some of the North American equities making moves in both directions today
On the rise
Walmart Inc. (WMT-N) was up 1.5 per cent on the heels of forecasting slowing online growth for the year on Tuesday after reporting weak results for the holiday quarter that suggested it was leaking sales to Amazon.
“Walmart’s shockingly bad results for its all-important holiday shopping quarter indicate that some of the company’s recent investments to bolster its e-commerce operations have failed to materialize,” said Jesse Cohen, senior analyst at financial markets platform Investing.com.
Walmart has been spending heavily to grow its online business and build up the digital capabilities of its stores, through services that help shoppers buy groceries online for pickup in store parking lots.
The company said it expects online sales to grow about 30 per cent in fiscal 2021, down from last year’s growth of 37 per cent. For the holiday quarter, the company reported a 35-per-cent rise, its slowest in nearly two years.
Kroger Co. (KR-N), an Ohio-based supermarket company climbed 5.4 per cent after Warren Buffett’s Berkshire Hathaway Inc unveiled a US$549.1-million stake in the supermarket chain.
U.S. asset manager Franklin Resources Inc. (BEN-N) jumped 6.9 per cent after it said on Tuesday it would buy mutual fund company Legg Mason Inc. (LM-N) in an all-cash deal valued at US$4.5-billion, including debt,as it looks to navigate through the changing preferences of investors for low-cost index tracking funds.
Investors’ shift towards passive funds has brought active asset managers under pressure to lower their fees and find ways to cut costs, including through mergers.
Several asset managers, including Vanguard Group Inc and BlackRock Inc, slashed their fees to near zero last year to attract customers amid rising competition.
Franklin Resources’ offer of US$50 per share represents a premium of 23 per cent to Legg Mason’s Friday close.
Shares of Legg Mason were 24.4 per cent higher.
On the decline
After large early gains, shares of Bombardier Inc. (BBD.B-T) slid 9.7 per cent a day after it confirmed its plan to sell its sell its rail business, known as Bombardier Transportation (BT), to Alstom for about €7.5-billion (US$8.2-billion)
The deal prompted an equity analyst at Raymond James to raise his rating for Bombardier shares before the bell.
Air Canada (AC-T) dropped 2.6 per cent after it missed analysts’ estimates for quarterly profit on Tuesday, as the airline spent more on maintaining older aircraft in its fleet amid the grounding of Boeing Co’s 737 MAX jet.
Canada’s largest airline said it expects aircraft maintenance expenses to increase by about $150-million this year from 2019.
Air Canada has focused on improving margins while meeting growing demand on key domestic and international routes, but faces capacity constraints due to the global grounding of the 737 MAX plane.
North American airlines have faced higher costs and canceled thousands of flights since the grounding following two crashes involving the model.
Air Canada, which is renewing its Airbus narrow-body fleet with MAX aircraft, had expected to expand its fleet of 24 MAX jets to 50 by mid-2020.
Shares of Apple Inc. (AAPL-Q) fell 1.8 per cent on Tuesday and dragged the stocks of its suppliers across the globe lower, after the iPhone maker warned of lower sales in the current quarter acknowledging that the coronavirus outbreak was pressuring its supply chain.
The drop in Apple’s stock is set to wipe nearly US$30-billion off its market capitalization, just as it was inching closer to US$1.5-trillion in value.
However, several Wall Street brokerages dubbed Apple’s update forecast as a “near-term headwind,” saying the company is performing strongly outside China and the launch of 5G phones later this year would further boost sales.
“We believe any material weakness in Apple shares as a result of the March 20 quarter revenue shortfall will prove to be a buying opportunity,” analysts at Piper Sandler wrote in a client note.
Medtronic PLC (MDT-N) slid 4 per cent after it missed estimates for third-quarter revenue on Tuesday as its heart device unit reported a slowdown in demand ahead of new product launches, and warned of a hit to its fourth quarter from the coronavirus outbreak.
The world’s largest standalone medical device maker said: “The situation is fluid and the duration and magnitude of the impact are difficult to quantify at this time,” the company said in a statement."
Medtronic said it will monitor and assess the impact to its business from coronavirus that has claimed nearly 1,900 lives, and provide an update later in the quarter.
The company has multiple manufacturing and research facilities across China.
Park Lawn Corp. (PLC-T) was down 4.9 per cent after it announced Andrew Clark will be stepping down as chairman and CEO of the company. He will continue to work at the company until a new CEO is appointed. Paul Smith, a director of PLC for three years, will assume the role of chairman, the company stated.
In a research note, Acumen Capital analyst Jim Byrne said: “We believe the sudden departure will be a negative for the company’s shares in the near term until new leadership is found.”
Shares of Fluor Corp. (FLR-N) dropped 24.3 per cent after it said on Tuesday the U.S. Securities and Exchange Commission (SEC) is investigating the engineering and construction firm’s past accounting and financial reports for possible errors.
The company also said it expects to retain its government unit, which it had previously decided to sell, and stop reporting it as a discontinued operation.
Fluor said it is conducting an internal review and has not determined as to whether there are material errors in its financial statements, although such possibility remains.
The SEC has requested documents and information related to projects for which the company recorded charges in the second quarter of 2019, the company said, adding that it does not expect to file its annual report by the end of February.
With files from staff and wires