A roundup of some of the North American equities making moves in both directions today
On the rise
Tesla Inc. (TSLA-Q) jumped 9.8 per cent on Tuesday after an equity analyst at Credit Suisse upgraded the electric vehicle maker, seeing it poised to benefit as older competitors struggle to deal with the damage stemming from the COVID-19 pandemic.
According to the Wall Street Journal, Tesla has reached out to at least some of its landlords seeking rent reductions, as the auto maker looks for cost savings in response to the coronavirus outbreak that has closed much of its business.
Bombardier Inc. (BBD.B-T) was up 2.2 per cent in the wake of saying on Tuesday it plans to resume production at some of its facilities in the United Kingdom, which had been halted in March due to government-mandated social distancing to battle the coronavirus pandemic.
The company said it would restart train production at Derby and heavy maintenance at Ilford from April 14, and resume some operations at Crewe from April 15.
The Canadian train maker also said about forty employees had started work at its Bruges site in Belgium, which has been closed since March 16.
Apple Inc. (AAPL-Q) was 4.9 per cent higher after it shipped roughly 2.5 million iPhones in China in March, a slight rebound after one of its worst months in the country ever, according to government data.
Smartphone companies are hoping for a strong recovery in demand in China, where the deadly coronavirus is subsiding, just as it spreads overseas and looks set to trigger a global recession.
Mobile phone shipments in China in March totalled 21 million units, according to data from the China Academy of Information and Communications Technology (CAICT), a government think tank.
Apple said on Tuesday it has released a tool based on Apple Maps that will help governments fight the spread of coronavirus by showing the change in volume of people driving, walking or taking public transit.
Maps does not associate mobility data with a user’s Apple ID, and Apple does not keep a history of where a user has been, it added.
Johnson & Johnson (JNJ-N) increased 4.5 per cent after saying it expects its medical device business to begin recovering in the fourth quarter as elective medical procedures delayed by the coronavirus pandemic start to resume.
The U.S. healthcare conglomerate lowered its full-year 2020 forecast due to the hit to its medical device business with procedures like hip and knee replacements on hold. The division accounts for nearly 30 per cent of its total quarterly sales.
However, investors appeared to take heart that J&J did not simply withdraw its 2020 forecasts over coronavirus uncertainty as the pandemic causes massive business disruptions around the world. It also raised the quarterly dividend to US$1.01 per share.
J&J’s forecast for 2020 adjusted earnings of US$7.50 to US$7.90 per share - down from its prior estimate of US$8.95 to US$9.10 - assumes that a return of the coronavirus outbreak in the fall will look much different than the current global health crisis.
“If the virus does return, the world should be much better prepared to test, identify and isolate it. There may also be therapeutic options available,” Chief Financial Officer Joseph Wolk said on a conference call.
Roku Inc. (ROKU-Q) jumped 10.3 per cent after it reported preliminary first-quarter revenue above analysts’ estimates on Monday as more people used its video streaming devices and content platform to keep themselves entertained during the coronavirus-led lockdowns.
The company also expected viewers to stream about 13 billion hours of content on its platform in the first quarter, a 49-per-cent jump from a year earlier.
Roku, however, said it was withdrawing its full-year financial outlook due to the economic uncertainty arising from the coronavirus pandemic.
The company, which charges a commission from media companies that stream programming on the free, ad-supported Roku channel, said it expects some marketers to pause or reduce ad spending in the near term. It also drew down US$70-million from its revolving credit facility.
Roku said it expects 39.8 million active accounts as of March 31, a net increase of nearly 3 million since Dec. 31.
Cameco Corp. (CCO-T) finished up 0.5 per cent on the heels of announcing after the bell Monday an extension to its temporary production suspension at its Cigar Lake uranium mine in northern Saskatchewan due to the effects of COVID-19.
On March 23, Cameco announced Cigar Lake was being placed in safe care and maintenance mode for four weeks.
“With the impact of COVID-19 continuing to escalate, we have determined that the Cigar Lake workforce will need to remain at its current reduced level for a longer duration,” the company said. “The precautions and restrictions put in place by the federal and provincial governments, the increasing significant concern among leaders in the remote isolated communities of northern Saskatchewan, and the challenges of maintaining the recommended physical distancing at fly-in/fly-out sites with a full workforce were critical factors Cameco considered in reaching this decision.”
Citing “the rapidly developing COVID-19 pandemic and the number of moving pieces it creates,” the company also announced it is withdrawing its outlook for 2020.
Cisco Systems Inc. (CSCO-Q) was up 3.9 per cent after it launched a US$2.5-billion financing program on Tuesday that lets its customers defer 95 per cent of payments until 2021, giving companies additional leeway at time when some are facing a cash crunch but also need more remote-work tools.
As the coronavirus forces many businesses to operate entirely online, many of them have adopted or boosted usage of video conferencing and virtual private network software, including Cisco’s Webex and AnyConnect. The surge in internet activity has also increased usage of networking equipment that Cisco also sells.
The financing offer, which requires no payment for three months and then 1 per cent of money owed in each of last five months of 2020, could help Cisco stand out among competitors in software and hardware and keep revenue flowing in a challenging economic climate.
Walt Disney Co. (DIS-N) rose 2.7 per cent after it said late Monday it has entered an unsecured credit agreement for US$5-billion, at a time when companies across industries are scrambling to bolster their liquidity to weather the fallout from the coronavirus crisis.
Disney’s theme parks business has taken a particularly severe hit as lockdowns have restricted people’s movement and gatherings in order to curb the spread of COVID-19.
The company said in a filing the credit agreement, which has terms similar to another one it entered on March 6, will mature on April 9, 2021, adding that the fund could be used for day to day operations.
The agreement can be extended for another year at the time of maturity if the lenders agree, it said.
Marriott International Inc. (MAR-Q) increased 6 per cent after estimating a 60-per-cent decline in revenue per available room, a key measure of hotel health, in March as the coronavirus crisis brought global travel to a virtual standstill.
The company, however, said booking trends were improving in China, where the novel coronavirus originated, as travel restrictions ease and offices slowly reopen.
Occupancy in Greater China rose to roughly 20 per cent in the first week of April, Marriott said.
But booking trends for the rest of the world have not yet stabilized, it added.
Overall, for the first quarter Marriott expects to report a 23-per-cent drop in revenue per available room.
The company “does not expect to see a material improvement (in performance) until there is a view that the spread of COVID-19 has moderated and governments have lifted restrictions,” it said.
On the decline
JPMorgan Chase & Co. (JPM-N) dipped 2.8 per cent after its quarterly profit slumped by more than two-thirds as the coronavirus pandemic and record low oil prices forced the largest U.S. bank to boost reserves to protect it from a wave of potential loan defaults.
Provision for credit losses jumped over five-fold to US$8.3-billion in the first quarter, with two-thirds of the additional credit reserves taken for consumer loans.
“Given the likelihood of a fairly severe recession, it was necessary to build credit reserves,” JPMorgan Chief Executive Officer Jamie Dimon said in a statement.
Mr. Dimon had warned shareholders last week that the coronavirus crisis would hurt profits “meaningfully” through 2020.
Wells Fargo & Co. (WFC-N) sat 4 per cent lower after its first-quarter profit plunged as it set aside billions of dollars to cover potential loan-losses from the coronavirus pandemic.
Wells, the fourth-largest U.S. lender, said before the bell quarterly profit fell to US$42-million, or 1 US penny per share, from US$5.51-billion, or US$1.20 per share, a year earlier.
Analysts had expected a profit of 33 US cents per share, on average, according to Refinitiv data. It was not immediately clear whether the estimates were comparable.
Boeing Co. (BA-N) slid over 4 per cent after reporting another 75 cancellations for its 737 MAX jetliner in March, as the coronavirus crisis worsens disruptions from the grounding of its best-selling jet.
The U.S. planemaker posted a total of 150 MAX cancellations in March, including 75 previously reported from Irish leasing company Avolon.
New cancellations came from buyers including 34 of 135 aircraft ordered by Brazil’s GOL.
The cancellations come as Boeing seeks to untangle delivery commitments after halting output of the MAX in January, following delays in returning it to service.
Boeing, facing a 13-month-old freeze on deliveries of the MAX and now disruption to deliveries of larger planes due to the coronavirus epidemic, said it had delivered 50 planes in the first quarter, nearly a third of the 149 seen a year earlier.
The company posted orders in March for 12 787 Dreamliners, one 767 freighter and 18 pre-MAX versions of the 737 for the P-8 maritime patrol program. For the first quarter, it posted 49 new orders, or a negative total of 147 after cancellations.
See also: Boeing’s problems predate the coronavirus. Should the U.S. come to its rescue?
Exxon Mobil Corp. (XOM-N) was down 0.8 per cent after raising US$9.5-billion in new debt on Monday, with the largest U.S. oil producer seeking to bolster its finances while debt markets remain open to new deals.
Exxon paid a lower price to borrow than it did in a similar debt deal almost four weeks ago, a sign of how investor confidence is gradually returning after a rout in energy prices and a stock market collapse fueled by the coronavirus outbreak.
Nevertheless, borrowing costs for Exxon were still higher than prior to the coronavirus outbreak.
Exxon raised US$9.5-billion by selling five different bonds with a variety of durations ranging from five years to 31 years, up from US$9-billion which it had originally planned to raise, indicating robust investor demand.
J.C. Penney Co Inc. (JCP-N) declined 4.5 per cent following a Bloomberg News report that it has approached consulting firm AlixPartners LLP as the U.S. retailer looks at options for managing its debt.
Brick-and-mortar retailers are struggling to keep up with the shift to online shopping, and the crisis has been exacerbated by the coronavirus outbreak which has forced them to shutter stores and furlough employees.
J.C. Penney has been in talks with lenders in recent weeks about its liquidity needs and negotiating a possible debt deal, the report said.
The retailer had US$3.72-billion in borrowings as of Feb. 1, its latest annual filing showed, with cash and cash equivalents of US$386-million. Its 2019 sales fell 8 per cent to US$10.72-billion from the previous year.
The company’s combined credit score, which measures on a scale of 100 to 1 how likely a company is to default on its debts in the next year, was “1”, according to Refinitiv Eikon data, indicating it was expected to default.
With files from wires and staff
David Leeder