A roundup of some of the North American equities making moves in both directions today
On the rise
Montreal-based CAE Inc. (CAE-T) rose despite reporting a quarterly loss on Tuesday as the COVID-19 pandemic hit demand for training and deliveries of full-flight simulators.
CAE said deliveries of flight simulators fell to 10 units in the second quarter ended Sept. 30, from 18 units a year earlier.
Demand for CAE’s flight simulators is linked to new aircraft deliveries by planemakers Boeing Co and Airbus, which are seeing lower jet sales amid a slump in air travel due to the coronavirus crisis.
CAE, which produces flight simulators for jets including Boeing’s 737 MAX planes, is cutting costs and counting on the easing of travel restrictions to bolster demand for pilot-training services.
The world’s largest civil aviation training specialist sees training opportunities with airline customers when planes start flying again following regulatory approval.
CAE said its net loss attributable to shareholders was $5.2-million, or 2 cents per share, in the quarter, compared with a profit of $73.8-million, or 28 cents per share, a year earlier.
Revenue fell 21 per cent to $704.7-million.
Pollard Banknote Ltd. (PBL-T) rose in response to the release of better-than-anticipated third-quarter results after the bell on Monday.
In a research note, Canaccord Genuity analyst Robert Young said: “Pollard Banknote reported strong Q3 results, ahead of our estimates, underscoring the resilience of Pollard’s suite of products in the face of COVID-19. The strength was broad based and evident in the instant ticket business, the charitable gaming business, and, in particular, the iLottery business, which goes to market through the NeoPollard JV. Record adj EBITDA of $24.5-million or 21-per-cent margin (19.2 per cent removing benefit assistance) benefitted from cost containment activities and iLottery shift from a drag to a benefit. Overall, the quarter benefitted from a resilient product and strong execution.”
See also: Tuesday’s analyst upgrades and downgrades
The U.S. Food and Drug Administration on Monday authorized emergency use of Eli Lilly and Co.’s (LLY-N) experimental COVID-19 antibody treatment, which President Donald Trump has praised and vowed to make available free of cost for all Americans.
The news sent Lilly shares higher
The FDA said its emergency use authorization was based on clinical trials showing that the treatment, bamlanivimab, reduced the need for hospitalization or emergency room visits in COVID-19 patients at high risk of disease progression. It can be used for treating mild-to-moderate COVID-19 in adults and pediatric patients over the age of 12, the FDA said.
Occidental Petroleum Corp. (OXY-N) was higher despite posting its fourth straight quarterly adjusted loss on Monday as the oil and gas producer suffered from a plunge in crude prices due to the COVID-19 pandemic.
The oil and gas producer has been forced to slash jobs, production and the value of its assets as it struggles with the debt taken on in last year’s US$38-billion acquisition of Anadarko Petroleum, an ill-timed bet on oil prices rising.
Occidental said worldwide production from continuing operations rose 11.24 per cent to 1.24 million barrels of oil equivalent per day in the third quarter, while the average price it received for crude oil plummeted about 31.5% to $38.67 per barrel.
Net loss attributable to common stockholders was US$3.8-billion, or US$4.07 cents per share, compared with a loss of US$912-million, or US$1.08 cents per share, a year earlier.
The quarter included a one-time charge of about US$2.4-billion related to Occidental’s equity investment in Western Midstream Partners LP and US$700-million of losses associated with the divestitures of onshore Colombia assets and some acreage in Wyoming, Colorado and Utah.
Excluding one-time items, the company lost 84 US cents per share.
On the decline
Canadian food producer Premium Brands Holdings Corp. (PBH-T) was lower after announcing with a coalition of Mi’kmaq First Nations they would buy Clearwater Seafoods Inc. (CLR-T), one of the largest shellfish distributors in the country, in a deal valued at about $1-billion, including debt.
Halifax-based Clearwater is the largest holder of shellfish licences and quotas in Canada, and in March the company announced a strategic review. Late Monday, Premium Brands announced it is teaming up with the group of Mi’kmaq First Nations to acquire Clearwater together for $8.25 a share in cash, which equates to a market value purchase price of $537-million.
The joint venture will be equally owned by food supply giant Premium Brands of Richmond, B.C., and the coalition of Mi’kmaq First Nations on the East Coast. “This is a transformational moment for all the participating Mi’kmaq communities,” Chief Terry Paul of Membertou First Nation said in an interview.
- Tim Kiladze and Mark Rendell
Endeavor Mining Corp. (EDV-T) fell after it said on Tuesday it was in talks with fellow West Africa-focused gold miner Teranga Gold Corp. (TGZ-T) over a potential merger, as it looks to add heft amid soaring prices for the yellow metal.
The discussions may or may not result in an agreement, the company said.
Earlier this year, Endeavour acquired miner Semafo to create the biggest gold producer in Burkina Faso, increasing its focus on the country despite rising insecurity.
The announcement also comes at a time when prices of safe-haven gold have gained on the back of global stimulus to cushion economies from the fallout of the COVID-19 pandemic.
As of Monday’s close, Endeavour had a market valuation of $5.23-billion, while Teranga was worth $2.2-billion.
Bloomberg had previously reported, citing people with knowledge of the matter, that Endeavour Mining was exploring a purchase of Teranga.
Apple Inc. (AAPL-Q) closed narrowly lower after introducing its first microprocessor for Mac computers, called the M1, a move that will tie its Macs and iPhones closer together technologically.
The change of chips will mark a move away from Intel Corp technology that has driven the electronic brains of Mac computers for nearly 15 years.
The change will be a boon for Apple computers, whose sales are overshadowed by its iPhone but still total tens of billions of dollars per year. Apple hopes developers now will create families of apps that work on both computers and phones.
Apple Inc said in June that it would begin outfitting Macs with its own chips, building on its decade-long history of designing processors for its iPhones, iPads and Apple Watches.
Apple’s phone chips draw on computing architecture technology from Arm Ltd and manufactured by outside partners such as Taiwan Semiconductor Manufacturing Corp, or TSMC.
Power efficiency - that is, getting the most computing done per watt of energy consumed - is one of Apple’s key aims.
Beyond Meat Inc. (BYND-Q) shares sank on Tuesday as a slowdown in the pace of sales growth for its plant-based meat shocked investors, while a surprise announcement of a tie up with McDonald’s Corp. (MCD-N) created more confusion than hunger on Wall Street.
The faux meat maker’s shares surged nearly 90 per cent over the last year, as the company emerged as one of the leaders of a plant-based meat trend that has had fast-food chains falling over themselves in a rush to get the veggie products on their menus.
However, Beyond Meat said on Monday COVID-19 restrictions were cutting sales at many of the restaurants and food-service joints it supplies, while initial stocking up of its plant-based burgers and sausages at grocery stores had tapered down, leading to a surprise quarterly loss.
“We are struck by the degree to which third quarter revenues came in shy of the Street (it has been a long time since a food company missed like this) and our crystal ball into Beyond Meat’s near-term fortunes is cloudier than ever,” J.P.Morgan analysts said.
J.P.Morgan was not the only brokerage rethinking its forecasts for the company, as at least eight brokerages cut their price targets on the company’s stock.
There was some confusion around Beyond Meat’s involvement with McDonald’s new “McPlant” product line, which was announced on Monday.
Nikola Corp. (NKLA-Q) and its founder Trevor Milton received grand jury subpoenas from the U.S. Department of Justice in September in connection to allegations of fraud by short-seller Hindenburg, the electric-truck maker said in a regulatory filing late on Monday.
The news sent its shares lower.
The company also received a grand jury subpoena from the New York County District Attorney’s Office in the same month.
The U.S. Securities and Exchange Commission also issued subpoenas to Nikola, its board and eight of its officers and employees in September, the company disclosed in the filing, which was prompted by the short-seller’s scathing report earlier that month.
The report had claimed that Mr. Milton, who has since resigned as chairman, had made false claims about the company’s proprietary technology to form partnerships with large automakers. Nikola publicly rejected all accusations.
Walt Disney Co. (DIS-N) slid lower after it said on Monday it was furloughing additional workers from its Disneyland theme park in Southern California, because it still does not know when the state will allow it to reopen because of the coronavirus pandemic.
The number of furloughs, which include executive, salaried and hourly workers, was not known. It comes on top of the 28,000 employees who were laid off in September, mostly across Disney’s U.S. theme parks, in California and Florida.
The furloughs was announced in a memo to staff from Disneyland Resort President Ken Potrock that was seen by Reuters. Disneyland, located in Anaheim, has been closed since mid-March.
California health authorities in October dashed hopes of the reopening of large theme parks anytime soon, saying that cannot happen until a county’s COVID-19 risk level falls to the lowest of the state’s four tiers regarding coronavirus spread and infections.
“The recently released state guidelines put us in limbo regarding a reopening timeline in the foreseeable future,” Mr. Potrock’s memo said.
As a result, Disney was “in the untenable situation of having to institute additional furloughs for our executive, salaried and hourly cast,” he said.
America’s largest mall operator Simon Property Group Inc. (SPG-N) was lower after it missed quarterly estimates for earnings and lease income, as retailers ravaged by the COVID-19 pandemic shut stores, paid lower rents or delayed payments.
The company’s shares closed up nearly 30 per cent on Monday following the success of drugmaker Pfizer Inc’s COVID-19 vaccine, amid hopes that shoppers could return to malls.
Simon’s properties, that include malls and lifestyle centers in the United States, were forced to close during pandemic-led lockdowns and the company was left behind with months of unpaid rents and bankruptcy of some of its biggest tenants.
“We still have some unresolved amounts with certain larger national tenants who unfortunately are refusing to pay their contractual rent even though they are open and operating,” Chief Executive Officer David Simon told analysts.
The company sued some retailers, including Gap Inc, earlier this year for having failed to pay rents.
Simon said the leasing environment was improving, with the mall operator signing long-term and pop-up lease deals with leading brands, including names like Prada, Ferrari and UGG.
Lease income fell about 24 per cent to US$993.8-million, compared with the estimate of US$1.08-billion, according to IBES data from Refinitiv.
Funds from operations was at US$2.05 per share, well below the estimate of US$2.28.
American Airlines Group Inc. (AAL-Q) lost ground in the wake of announcing a proposed underwritten public offering of 38.5 million shares of its common stock on Tuesday, as the airline looks to boost its liquidity amid falling sales during the coronavirus crisis.
Sole bookrunner Bank of America has priced the offering at US$13 per share, representing a discount of 1.5 per cent to the airline’s closing price on Monday, according to sources.
American Airlines said it expects to use the net proceeds from the offering for general corporate purposes.
The airline said it expects to end the fourth quarter with more than US$14.5-billion in total available liquidity, up from US$13.6-billion at the end of the third quarter.
Up to Monday’s close, American’s stock had fallen 54 per cent this year, underperforming a 6.5-per-cent rise in the Dow Jones Transport Average index.
With files from staff and wires
David Leeder