A roundup of some of the North American equities making moves in both directions today
On the rise
MTY Food Group Inc. (MTY-T) jumped higher in response to the release of better-than-anticipated third-quarter results.
On Friday, the Montreal-based restaurant company reported revenue and adjusted EBITDA of $135.4-million and $43.4-million, respectively, exceeding the consensus projections on the Street of $125.7-million and $26.3-million.
That led several equity analysts to react on Tuesday.
Raymond James' Michael Glen said: “While we continue to read and hear about the restaurant industry facing substantial amounts of pressure in various media reports, we would be hard pressed to conclude that MTY’s 3Q financial results were illustrative of any such situation.”
BlackRock Inc. (BLK-N) rose after its quarterly results exceeded analysts' estimates on Tuesday helped by broad-based strength in its businesses, as the recovery rally in global financial markets helped world’s largest asset manager end the quarter with a record US$7.81-trillion in assets under management.
“Each of our strategic investment areas, including iShares ETFs, alternatives and technology, continue to grow, while strong investment performance has driven positive active flows over the last year,” said BlackRock’s chief executive, Larry Fink.
Financial markets rallied in the third quarter, extending the second quarter’s dramatic rebound from a pandemic-fueled low hit in March, as accommodative global central banks and improving growth prospects lifted risk appetite.
The S&P 500 rose 8.5 per cent for the quarter ended Sept. 30, even as investors remained wary of the U.S. presidential election on Nov. 3 and data underlined an uneven economic recovery against the backdrop of a resurgence of coronavirus cases around the world.
“Good markets always help, but they continue to take market share from smaller rivals,” said Kyle Sanders, an analyst with St. Louis-based financial services firm Edward Jones.
“We had pretty high expectations coming into the quarter and they far exceeded those,” said Sanders.
The New York-based company’s net income rose 27 per cent to US$1.42-billion, or US$9.22 per share, in the third quarter ended Sept. 30, from US$1.12-billion, or US$7.15 per share, a year earlier. Analysts had expected earnings of US$7.80 per share, according to IBES data from Refinitiv.
BlackRock’s performance fees jumped more than four-fold from a year earlier.
Walt Disney Co. (DIS-N) increased after it said on Monday it had restructured its media and entertainment businesses to accelerate growth of Disney+ and other streaming services, which have become increasingly popular with consumers.
Under the reorganization, Disney will separate the management of its content and distribution to be more responsive to consumer demands.
The move came days after activist investor Daniel Loeb of hedge fund Third Point urged Disney to forgo a dividend payment and double its programming investment in streaming.
The media and theme parks company launched the Disney+ streaming service in November 2019. It has exceeded its own targets by drawing more than 100 million streaming customers worldwide to Disney+, Hulu and ESPN+.
Amazon shares (AMZN-Q), which have already surged 86% this year, gained further ground as it began 48 hours of promotions as part of “Prime Day” in an early start to the holiday shopping season.
The event, typically held in July to boost summer sales, is now a kickoff to what will be an earlier holiday shopping season. The member-only discounts are a key way Amazon markets Prime, a fast-shipping and media-streaming service that incentivizes subscribers to do more shopping on Amazon.
Rivals Walmart Inc and Target Corp are meanwhile hosting promotions at the same time. Online sales may prove critical for retailers as the pandemic forestalls the typical crowds at stores after the U.S. Thanksgiving holiday.
At the pandemic’s outset, Amazon was focused on shipping essential items to shoppers. Now its aim is to help customers with their holiday lists on Prime Day, said Jamil Ghani, a company vice president.
“It kicks off the holiday season,” he told Reuters last month.
Tesla Inc. (TSLA-Q) was narrowly higher as it said on Tuesday it has cut the price of its Model S “Long Range” sedan by 4 per cent in the United States, days after the electric-car maker reported record quarterly deliveries.
The company, which is expected to report third-quarter results on Oct. 21, cut the price to US$71,990 from US$74,990 in the United States. It also trimmed the starting price of Model S by 3 per cent in China.
Earlier this month, the carmaker cut the starting price of its Chinese-made Model 3 sedans by about 8 per cent to 249,900 yuan (US$36,805).
Tesla said it delivered 139,300 vehicles in the third quarter, an all-time record, yet shares fell as some analysts doubted if Tesla could hit its ambitious year-end target.
On the decline
Shares of Air Canada (AC-T) slipped in the wake of announcing on Saturday they’ve agreed on revised terms to acquire Transat AT Inc. (TRZ-T).
Under the deal, Air Canada will pay $5 a share for the parent company of Air Transat, compared with the $18 a share originally pledged in its takeover bid.
That brings the total price of the takeover to $190-million, down from $720-million previously.
Transat shares soared with the news.
In a research note released before the bell, Laurentian Bank Securities analyst Nauman Satti said: “We are not surprised by the revision in the acquisition price and had highlighted the potential risk in our previous notes given the fundamentals of the aviation industry have changed drastically. The revised price should incentivize Air Canada to actively engage with regulators for approval while Transat receives the requisite approval to shore-up its liquidity position. The deal structure provides TRZ shareholders with further upside if they opt for payment via AC shares.”
Hudbay Minerals Inc. (HBM-T) lost ground after announcing Sunday it has temporarily suspended production at its 777 Mine in Flin Flon, Manitoba, due to an incident that occurred on Oct. 9.
“An inspection of the damage to the shaft is underway and it is expected to take several weeks to fully assess the damage and the remedial work needed. In the meantime, the company has notified its insurers and has implemented its business continuity plans to mitigate potential impacts to production from the Manitoba business unit. This includes reassigning equipment and personnel to the Lalor mine in Snow Lake and continuing to operate the zinc plant by processing available zinc concentrate inventory and optimizing the production of zinc concentrate from the Snow Lake operations,” the company said.
Before the bell, an equity analyst at Scotia Capital raised his rating for the Toronto-based miner’s shares.
Apple Inc. (AAPL-Q) declined after it launched the iPhone 12 with faster 5G connectivity starting at $799, which the Cupertino, California company hopes will spur a wave of upgrades and keep its sales booming through the end of the year.
The iPhone 12, with a 6.1-inch display, has flat sides with a flush display, similar to the company’s iPhone 5 and a departure from rounded edges in recent years.
Apple also introduced a “Mini” version with a 5.4-inch screen for $699 and a “Pro” version with three cameras starting at $999.
Pre-orders for the iPhone 12 and iPhone 12 Pro begin Oct. 16 and go on sale Oct. 23. The iPhone Mini will be available for pre-order Nov. 6 and in stores Nov. 13.
Verizon Communications Inc CEO Hans Vestberg said the new iPhones would work with the carrier’s “ultrawideband” 5G network designed to alleviate bottlenecks in major cities like New York and Los Angeles as well as in crowded areas like NFL stadiums.
U.S. drugmaker Eli Lilly and Co (LLY-N) dropped after it said on Tuesday that the government-sponsored clinical trial of its COVID-19 antibody treatment has been paused because of a safety concern.
“Out of an abundance of caution, the ACTIV-3 independent data safety monitoring board (DSMB) has recommended a pause in enrollment,” Lilly spokeswoman Molly McCully said in an emailed statement. “Lilly is supportive of the decision by the independent DSMB to cautiously ensure the safety of the patients participating in this study.”
JPMorgan Chase & Co (JPM-N) finished lower after it comfortably beat Wall Street estimates for third-quarter profit on Tuesday as the largest U.S. bank gained from a boom in trading in financial markets and set aside virtually no provisions for loan losses.
JPMorgan is widely seen as a barometer for the health of the broader economy, and its robust performance this quarter bodes well for Bank of America and other large lenders reporting this week.
The upbeat results were driven in part by a huge fall in the reserve provisions it puts aside - just US$611-million, compared with the US$10.5-billion three months ago, suggesting the bank believes it has taken the bulk of the pain for now for the coronavirus-driven slump.
Trading was another bright spot for the quarter, even as the pandemic decimated the U.S. economy, with thousands of businesses shutting down and the unemployment rate soaring. The economic fallout of the pandemic has triggered one of the worst recessions in decades.
Overall revenue fell slightly to US$29.9-billion, but still came in ahead of analysts' expectations. Revenue from three of its four main reporting lines rose, including trading, which jumped 30 per cent to US$6.6-billion.
Strong growth from capital markets and investment banking helped offset declines in its consumer business.
The bank’s net income rose to US$9.44-billion, or US$2.92 per share, in the quarter ended Sept. 30, from US$9.1-billion, or US$2.68 per share, a year earlier.
Analysts on average had expected earnings of US$2.23 per share, according to Refinitiv.
Citigroup Inc. (C-N) was down after it trounced estimates for third-quarter profit on Tuesday, as this year’s rollercoaster ride for global financial markets drove a surge in the bank’s trading revenue, countering the impact of ultra-low interest rates.
Adding to the bullish message from bumper results from peer JPMorgan, the bank reported respectively 18-per-cent and 15-per-cent jumps in revenue from bond and stock market trading.
With a coronavirus-driven recession crushing consumer and business confidence, and with it demand for loans, Citi reported its first outright fall in revenue this year, down 7 per cent to US$17.3-billion.
But even allowing for the impact of a US$400-million fine related to its mistaken transfer of US$1-billion to lenders of Revlon Inc, Citi’s total net income for common shareholders at US$1.40 per share beat analysts' expectations of 93 US cents.
Analysts from brokerage Oppenheimer calculated that without the penalty, core operating earnings per share would have been US$1.55.
Great Canadian Gaming Corp. (GC-T) was lower after announcing the temporarily suspension of casino operations at Casino Woodbine and Casino New Brunswick as of 11:59 p.m. on Oct. 9 due to restrictions implemented by the the provincial governments of both Ontario and New Brunswick.
It said the company’s 10 other properties in Ontario were not impacted.
Kirkland Lake Gold Ltd. (KL-T) was down in the wake of announcing “solid” third-quarter production results late Monday.
The Toronto-based miner said quarterly production came in at 339,584 ounces, an increase of 37 per cent year-over-year. Thus far in 2020, production has risen 44 per cent to 1,000,218 ounces.
Kirkland also announced a 50-per-cent increase in its quarterly dividend to 18.75 US cents per share.
Johnson & Johnson (JNJ-N) fell despite hiking its full-year profit forecast for the second time in 2020, as strong demand for its cancer and Crohn’s disease treatments largely offset the impact to its businesses from the COVID-19 pandemic.
The strong third-quarter results come a day after the company said it had temporarily paused its COVID-19 vaccine candidate clinical trials due to an unexplained illness in a study participant, delaying one of the highest profile efforts to contain the global pandemic.
In the third quarter, sales rose to US$21.08-billion from US$20.73-billion, helped by rise in sales of its cancer drugs Darzalex and Imbruvica, as well as Crohn’s disease drug Stelara.
The company expects full-year 2020 adjusted profit of US$7.95 to US$8.05 per share, from its prior range of US$7.75 to US$7.95 per share.
Profit more than doubled to US$3.55-billion in the third quarter, from a year earlier when the company had recorded “other expenses” of US$4.21-billion.
On an adjusted basis, the company earned US$2.20 per share, beating analysts' estimates of US$1.98 per share, according to IBES data from Refinitiv.
Delta Air Lines (DAL-N) slipped after it said on Tuesday it does not expect to plug a daily cash bleed due to the COVID-19 pandemic until next spring, although it has at its disposal US$1.3-billion in leftover federal aid for employees' payroll.
The airline previously said it could halt a cash bleed that averaged US$18-million per day in September before the end of the year, but pushed back the target as revenues fell 76 per cent to US$3.1-billion in the third quarter from a year earlier.
Atlanta-based Delta, the first U.S. airline to report third-quarter results, said it expects its cash burn to narrow to US$10-million to US$12-million per day in December. It was burning US$27-million in cash per day in June.
The company swung to a US$5.4-billion net loss, or US$8.47 per share, in the quarter ended Sept. 30 from a US$1.5-billion profit a year ago. Analysts had estimated a US$3.04 per share loss, based on Refinitiv data.
The losses included a US$3.1-billion charge for voluntary separation and early retirement programs as Delta slimmed its workforce as demand plunged, and a $2.2 billion fleet restructuring charge.
Boeing Co. (BA-N) was down after company data showed on Tuesday it lost another three orders for its grounded 737 MAX jetliner in September, and delivered 11 total aircraft to customers,.
The closely watched monthly snapshot also shows that quality flaws on the 787 Dreamliner continue to hamper efforts to develop an alternative cash cow to the 737 MAX, grounded after two fatal crashes in 2018 and 2019.
As Boeing works to win regulatory approval, potentially early next month, to fly the 737 MAX again in the United States, the coronavirus pandemic continues to hurt demand for jets from both Boeing and European rival Airbus.
Boeing said it lost orders for two 737 MAX jets from leasing company BOC Aviation and another jet from an unidentified customer in September. That brings the total number of canceled MAX orders, including those where buyers converted one type of jet to a different model, to 436 jets, Boeing said.
Cancellations of all jet models stood at 448 for the year.
With files from staff and wires
David Leeder