A roundup of some of the North American equities making moves in both directions
On the rise
Vermilion Energy Inc. (VET-T) rose after releasing its budget for the year after the bell on Monday.
The Calgary-based company announced a plan to at $300-million in 2021, resulting in average production of 83-85,000 barrels of oil equivalent per day.
In a research report, ATB Capital analyst Patrick O’Rourke said: “VET released its 2021 budget, which guided for both capital spend and production below our prior expectations, as the Company continues with its turnaround strategy, and attempts to reset the production base to a more appropriate level given the nature of assets (increasing relative capital spend to international asset base, which is generally more mature), and a focus on increasing liquidity through nominal debt reduction. While we believe that management is fully capable of turning around the story over time, we have reduced our rating by one notch (from Outperform to Sector Perform), to reflect the slower pace of forecasted development reducing our NAV in the near-term.”
Shares of Boeing Co. (BA-N) were up as more countries confirmed their intentions to resume 737 MAX commercial operations following a worldwide grounding in 2019 of the model in the wake two fatal crashes
Canada said on Monday it will lift a near two-year flight ban on 737 MAX on Jan. 20.
The model will receive final clearance to resume flying in Europe next week, the head of the EU’s air safety watchdog said on Tuesday.
The EU Aviation Safety Agency (EASA) is one of the last major regulators to approve changes to the MAX and its anti-stall software, blamed for two deadly crashes that grounded the jet in March 2019.
The European agency, which published a draft airworthiness directive in November, has made largely presentational adjustments after public consultations, Executive Director Patrick Ky said in an online media briefing.
“We expect to publish it next week, which means the MAX will be cleared to fly again,” Ky said. A separate certification of the MAX-200 variant will likely follow in “coming weeks”, he added, allowing flights to resume before summer.
Boeing shares have more than doubled after hitting a six-year low in March 2019 after global groundings of 737 MAX jets. The stock is still about 40 per cent below its Feb. 2019 peak.
A day after it reached an all-time high on the TSX, U.S.-listed shares of Lithium Americas Corp. (LAC-N, LAC-T) open at a record level.
On Friday, the U.S. Bureau of Land Management gave final approval to its Thacker Pass lithium mine in northern Nevada. The move is part of a push by policymakers to boost domestic output of lithium for electric-vehicle batteries .
The Vancouver-based company now plans to seek financing for project, which could be producing lithium by October of 2022.
Casino operator MGM Resorts International (MGM-N) soared after it said on Tuesday it does not intend to submit a revised proposal for Ladbrokes owner Entain, which rejected the U.S. firm’s US$11-billion approach earlier this month for being too low.
Entain shares fell 17 per cent to 11.82 pounds, after hitting a session low of 11.37 pounds on Tuesday on the news, paring almost all the gains made since the U.S. company’s approach was made public.
“We look forward to continuing to work closely with MGM to drive further success in the United States through the BetMGM joint venture,” Entain said in a statement.
MGM said it would not make a firm offer for Entain, which at the start of the year said the U.S. company’s approach significantly undervalued its business.
The United States is seen as the next big growth market for sports betting, spawning a series of transatlantic partnerships tapping into European expertise such as Britain’s William Hill being bought by Caesars Entertainment in a 2.9-billion pound deal.
The announcement from MGM also comes days after Entain’s Chief Executive Officer Shay Segev decided to step down, after just seven months in the role.
General Motors Co. (GM-N) jumped after announcing with self-driving car maker Cruise they would partner with Microsoft Corp. (MSFT-Q) to commercialize driverless autonomous vehicles.
Microsoft will join General Motors, Honda Motor Co and institutional investors in a combined new equity investment of more than US$2-billion in Cruise, bringing the post-money valuation of Cruise to US$30-billion.
Cruise will use Azure, Microsoft’s cloud computing platform, for its self-driving vehicles.
“As Cruise and GM’s preferred cloud, we will apply the power of Azure to help them scale and make autonomous transportation mainstream,” Microsoft’s Chief Executive Officer Satya Nadella said in a statement.
GM will work with Microsoft to accelerate the automaker’s digitization initiatives, including artificial intelligence, and explore opportunities to streamline operations across digital supply chains and bring new mobility services to customers faster.
Entheon Biomedical Corp. (ENBI-CN), a Vancouver-based biotech firm , was higher after announcing a partnership with Divergence Neuro Technologies Inc. to research and develop to develop a biomarker model and software platform that guides drug delivery and dosing based on electroencephalogram (EEG) data and machine learning.
Last week, Entheon announced the completion of its acquisition of HaluGen Life Sciences Inc. , a biotech company in the business of developing and commercializing a pre-screening test to identify genetic markers predictive of an individual’s reaction to hallucinogenic drugs.
Office Depot owner ODP Corp. (ODP-Q) reversed early losses and closed narrowly higher after it said on Tuesday it rejected bigger-rival Staples’ more than US$2-billion takeover offer and instead proposed merging only the consumer-focused retail operations of the two office supplies companies to avoid regulatory scrutiny.
Staples’ earlier attempts at combining the companies, in 1996 and 2016, were foiled as antitrust enforcers deemed the deal would mean higher stationery prices and reduced competition for nationwide contracts for office supplies.
ODP, owner of Office Depot, OfficeMax and office IT service provider CompuCom, said it preferred a sale of its retail and e-commerce operations to Staples, or a joint venture, to a full takeover. Staples, a public company when the first offers were made, was taken private by Sycamore Partners in 2017.
“We believe the regulatory risk of pursuing a retail-only transaction to be significantly lower than your proposed transaction,” ODP chairman Joseph Vassalluzzo wrote in a letter to a Sycamore official.
Mr. Vassalluzzo said ODP does not plan to “engage in a transaction that, as history has shown, would likely result in a prolonged and expensive regulatory review process with no guarantee of success.”
On the decline
Vancouver-based Pan American Silver Corp. (PAAS-T) finished flat after announcing it expects 2021 silver production to rise 35 per cent year-over-year as well as record gold production, despite expecting the COVID-19 pandemic to have an “impact on operations.”
“Under our 2021 guidance assumptions, we expect to be generating robust levels of free cash flow,” said President and CEO Michael Steinmann. Our ability to overcome the extraordinary challenges over the past year while managing our nine operations, generating substantial free cash flow, advancing our La Colorada skarn project, and re-paying all our bank debt is a testament to our team and the benefit of having a diversified portfolio of quality assets. I anticipate 2021 being a much stronger year across all our operations.”
Bank of America Corp. (BAC-N) slid after it posted a drop in fourth-quarter profit on Tuesday that still topped Wall Street expectations and pointed to signs of an economic recovery as the pace of consumer spending gathers steam.
Underscoring its confidence in the economy, the bank joined peers JPMorgan Chase & Co and Citigroup Inc in releasing some of the cash it had set aside to cover coronavirus-driven loan losses.
“In the fourth quarter, we continued to see signs of a recovery, led by increased consumer spending, stabilizing loan demand by our commercial customers, and strong markets and investing activity,” Chief Executive Officer Brian Moynihan said.
Progress on COVID-19 vaccines and billions of dollars in stimulus position the bank well as economic recovery continues, Mr. Moynihan added.
The second-largest U.S. bank by assets, however, reported a 13-per-cent fall in consumer banking revenue to US$8.2-billion, citing a hit from lower interest rates.
Net interest income at the bank, a key measure of how much it can make from lending, tumbled 16 per cent. The bank reported a 10-per-cent fall in overall revenue, net of interest expense, to US$20.1-billion.
Net income applicable to common shareholders fell to US$5.21-billion, or 59 US cents per share, for the quarter ended Dec. 31 from US$6.75-billion, or 74 US cents per share, a year earlier.
Analysts on average had expected a profit of 55 US cents per share, according to the IBES estimate from Refinitiv, helped by lower credit costs.
Separately, the second-largest U.S. bank said its board approved a US$3.2-billion share repurchase program in the first quarter after getting a green light from regulators to resume buybacks last month.
Goldman Sachs Group Inc. (GS-N) fell back after it dwarfed Wall Street estimates as its fourth-quarter profit more than doubled, powered by another blowout performance at its trading business and a surge in fees from underwriting a string of blockbuster IPOs.
Revenue from global markets, which houses the bank’s flagship trading business, registered its best annual performance in a decade. Sales at the unit surged 23 per cent to US$4.27-billion in the quarter, raking in US$21.2-billion in the full year.
Investment banking revenue jumped 27 per cent to US$2.61-billion during the quarter, driven mainly by equity underwriting, which was up 195 per cent from the same period last year.
Total revenue climbed 18 per cent to US$11.74-billion. The bank’s net earnings applicable to common shareholders rose to US$4.36-billion, or US$12.08 per share, in the quarter ended Dec. 31.
Analysts had expected a profit of US$7.47 per share on average, according to the IBES estimate from Refinitiv.
“We hope this year brings much needed stability and a respite from the pandemic, but we remain ready to handle a wide range of outcomes,” Chief Executive David Solomon said, as the bank reiterated the three-year targets it set for profitability and expense savings last January.
Goldman’s performance was in line with broader gains for trading units across Wall Street banks, with JPMorgan Chase also reporting stronger-than-expected results as financial market volumes remained consistently high.
Halliburton Co. (HAL-N) declined in the wake of posting a better-than-expected fourth-quarter profit on Tuesday, buoyed by cost cuts and a recovery in demand for oilfield equipment and services after last year’s industry slump.
The company, the industry’s second-biggest services provider, has slashed its quarterly dividend, cut its capital spending, and reduced its workforce and executive pay to cope with the decline in demand as its clients, oil and gas producers, tightened their belts and cut drilling activity.
While global crude price ticked up in the last three months of 2020 to average about US$45 per barrel, service companies have been forced to provide steep discounts.
“I am optimistic about the activity momentum I see in North America, and expect international activity to bottom in the first quarter of this year,” Halliburton Chief Executive Officer Jeff Miller said.
The company’s revenue from North America rose 26 per cent in the quarter to US$1.24-billion, while international revenue grow 0.4 per cent.
Halliburton, which kicked off fourth-quarter earnings for service companies, said total revenue rose 8.8 per cent to US$3.24-billion from the third quarter, slightly above analysts’ estimates of US$3.21-billion, according to Refinitiv IBES data.
Adjusted net income attributable to company rose 60 per cent to US$160-million, or 18 US cents per share, in the three months ended Dec. 31, from the third quarter. That beat analysts’ average estimate for a profit of 15 US cents per share.
With files from staff and wires
David Leeder