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A survey of North American equities heading in both directions

On the rise

Shares of First Quantum Minerals Ltd. (FM-T) closed up 1.3 per cent after it said late Monday it planned to conserve capital, suspend its dividend, cut jobs and lower costs to strengthen its financial position after it was forced to halt production at its Cobre Panama copper mine.

The company said it was also exploring the sale of smaller mines and stakes in its larger mining assets.

First Quantum said it would reduce its workforce to below 1,000 workers from about 1,400 workers at the Panama mine, depending on environmental stewardship programs.

It will also cut production at its Australian nickel mine due to a “significant” downturn in prices of the metal last year, resulting in a 30-per-cent reduction in the operation’s workforce.

The Cobre Panama project, one of the world’s largest open-pit copper mines, was forced to shut down after Panama’s top court ruled that its contract was unconstitutional.

That followed nationwide protests opposed to its continued operation and led to fall in fourth-quarter copper production.

Toronto-based First Quantum’s fourth quarter copper production dropped 22 per cent to 160,000 metric tons.

“Recent discussions in Panama have been constructive regarding the responsible environmental stewardship of the mine,” CEO Tristan Pascall said in a statement.

The Canadian miner said it now expected between 370,000 and 420,000 tons of copper production for the current year, excluding the Panama mine, down from 708,000 tons last year.

Goldman Sachs (GS-N) erased early losses and gained 0.7 per cent after its profit rose 51 per cent in the fourth quarter as its equity traders capitalized on a recovery in markets and revenue from its asset and wealth management business rose, offsetting weakness in investment banking.

The bank reported a profit of US$2.01-billion, or US$5.48 per share, for the latest quarter, compared with US$1.33-billion, or US$3.32 per share, a year earlier.

“This was a year of execution for Goldman Sachs,” CEO David Solomon said in a statement. “With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024.”

Goldman’s equity trading revenue jumped 26 per cent in the fourth quarter. Revenue from the asset and wealth management business also jumped 23 per cent to US$4.39-billion, helped by gains from equity and debt investments.

Investment banking fees fell 12 per cent to US$1.65-billion, as a decline in mergers and acquisitions (M&A) offset gains from debt and stock sales.

Revenue from fixed income, currencies and commodities (FICC) trading fell 24 per cent as weakness in interest rate products and currencies dragged down gains from mortgage products.

Goldman is among the banking giants that will pay a special assessment fee to refill a government deposit insurance fund (DIF) that was drained of US$16-billion by the collapse of two regional banks last year.

It recognized a US$529-million expense tied to the fee in the fourth quarter.

Tesla Inc. (TSLA-Q) was up 0.5 per cent after CEO Elon Musk said he would be uncomfortable growing the automaker to be a leader in artificial intelligence and robotics without having at least 25-per-cent voting control of the company, nearly double his current stake.

Mr. Musk said on Monday in a post on social media platform X, formerly known as Twitter, that unless he got stock in the world’s most valuable automaker that was “enough to be influential, but not so much that I can’t be overturned,” at Tesla, he would prefer to build products outside of the electric-vehicle manufacturer.

He has long touted Tesla’s partially automated “Full Self-Driving” software and its prototype humanoid robots but the electric-vehicle maker generates most of its revenue from its automotive business.

Some analysts have also pegged the technologies, including Tesla’s Dojo supercomputer to train AI models, as drivers of the EV maker’s valuation, with Morgan Stanley analyst Adam Jonas saying in September that Dojo could boost its market value by almost IS$600-billion.

Chip design software maker Synopsys (SNPS-Q) was up 3.1 per cent after it said on Tuesday it would buy Ansys (ANSS-Q) in a US$35-billion cash-and-stock deal, snapping up the maker of software used in creating products from airplanes to tennis rackets of players like Novak Djokovic.

The transaction would be the biggest acquisition in the technology sector since chip maker Broadcom (AVGO-Q) took over software maker VMware last November in a US$69-billion deal.

It could herald more big deals as a pick up in economic sentiment and some failed attempts by antitrust regulators to thwart deals embolden chief executives to place large acquisition bets.

The deal implies a per-share value of US$390.19 and represents a premium of about 29 per cent over Ansys’ last close on Dec. 21, 2023, the companies said.

Reuters was first to report on Dec. 22 that Synopsys was in talks to acquire Ansys. Ansys started exploring a sale late last year after getting inbound acquisition interest from design software firm Cadence Design Systems, according to people familiar with the matter.

The deal comes just two weeks after Synopsys co-founder and Executive Chairman Aart de Geus handed over the chief executive reins to Chief Operating Officer Sassine Ghazi.

The pursuit of such a transformative acquisition amid a leadership change underscores the commercial appeal of Ansys’ software.

Ansys makes simulation software used by engineers, designers and researchers across industries like aerospace, defense, automotive and energy to help analyze products. The company’s products compete with Autodesk’s Fusion 360, AutoCAD and Dassault Systemes’ Solidworks.

Synopsys, which caters to major chipmakers such as Intel , Advanced Micro Devices and Nvidia, makes software that is used for chip design across several industries.

Both companies have seen their share price jump significantly over the past 12 months, amid a boom for artificial intelligence.

On the decline

Toronto-based Restaurant Brands International (QSR-T) declined 1.7 per cent after announcing it has signed a deal to buy Carrols Restaurant Group Inc. (TAST-Q), the largest Burger King franchisee in the United States, in a deal worth US$1-billion.

Under the agreement, Restaurant Brands, which own the Burger King brand as well as Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs, will pay US$9.55 per share in cash.

Carrols has 1,022 Burger King restaurants in 23 states as well as 60 Popeyes restaurants in six states.

RBI says the deal is part of a plan at Burger King plan to accelerate sales growth and drive franchisee profitability.

Burger King expects to invest about US$500-million to remodel about 600 of the acquired restaurants to bring them in line with its latest design.

The company ultimately plans to refranchise the vast majority of the portfolio to new or existing smaller franchise operators.

In a research note, Citi analyst Jon Tower said: “We think QSR’s deal to acquire TAST for $1-billion ($200-million cash/$750-million new debt) should be viewed as a positive by investors as it balances a reasonable price tag for the known asset (approximately 6.6 times 2024 Street EBITDA for TAST vs. QSR at 17.5 times) and higher operating risk against an acceleration in the pace of the Burger King US brand modernization plan (including a step-up in capital spend to $500-million in total by ‘28, with this funded by TAST cash from ops) meant to support sales growth and share gains in the years ahead.”

Barrick Gold Corp. (ABX-T) was down 8.8 per cent after it said on Tuesday its full-year preliminary production of gold fell from a year earlier, even as output rose sequentially in the fourth quarter.

The world’s second-largest gold miner said in November its 2023 gold production was forecast to be lower than expected due to equipment issues at its Dominican Republic mine and lower output at two sites in the Nevada Gold Fields project.

Barrick reported a 2.17-per-cent fall in 2023 gold output at 4.05 million ounces from a year earlier, which came below its forecast, and analysts’ average estimate of 4.16 million ounces, according to LSEG data.

Copper production also fell 4.76 per cent to 420 million pounds. Analysts had estimated 433 million pounds of output.

Barrick’s fourth-quarter output, however, rose to 1.05 million ounces of gold and 113 million pounds of copper, from 1.04 million ounces of gold and 112 million pounds of copper in the previous quarter.

The company said it expects all-in sustaining costs (AISC) per ounce of gold, an industry metric that reflects total expenses, to rise about 8 per cent to 10 per cent and copper’s AISC to be 2 per cent to 4 per cent lower from the previous quarter.

Barrick is scheduled to release its fourth-quarter results on Feb. 14.

Teck Resources Ltd. (TECK.B-T) declined 0.1 per cent in the wake of saying its copper production for 2023 fell short of its guidance for the year, while its zinc production also came in slightly below its expectations.

The Vancouver-based miner says copper production for 2023 totalled 296,500 tons as it faced a slower ramp-up at its QB2 project, as well as a localized geotechnical fault at its Highland Valley Copper operations in August that has been stabilized. The company’s guidance for 2023 had been for between 320,000 and 365,000 tons.

Meanwhile, Teck says zinc in concentrate production was 644,000 tons for the year compared with guidance for between 645,000 and 685,000 tons. Refined zinc production was 266,600 tons compared with guidance for between 270,000 and 290,000 tons.

Teck’s steelmaking coal production totalled 23.7 million tonns for 2023 compared with guidance for between 23.0 million and 23.5 million tons.

In its outlook for 2024, Teck says it expects copper production between 465,000 and 540,000 tons, while zinc in concentrate production is forecast between 565,000 and 630,000 tons. Refined zinc production this year is expected between 275,000 and 290,000 tons.

Steelmaking coal production for 2024 is expected to come in between 24.0 million and 26.0 million tons.

Morgan Stanley (MS-N) slipped 4.2 per cent after its revenue beat fourth-quarter expectations on Tuesday, as debt underwriting powered a rebound in investment banking, but its profit took a hit due to US$535-million in charges.

Toward the end of the year secondary share sales returned alongside high-profile initial public offerings and merger announcements, helped by lower market volatility and increased investor appetite.

“We are not changing our guidance to 2024, and we are optimistic and working on a premise of a soft landing,” said Chief Financial Officer Sharon Yeshaya in an interview with Reuters.

Investment banking revenue rose 5 per cent in the fourth quarter from a year ago, outperforming the broader industry. Fixed income underwriting revenue jumped 25 per cent on higher investment grade issuance.

Morgan Stanley is among the banking giants that are paying special fees to replenish a government deposit insurance fund that was drained by almost US$16-billion after the collapse of two regional lenders last year.

It took a combined US$535-million in charges, which included US$286-million in special assessment fee to the regulator and US$249-million in legal charges.

Earlier this month, Morgan Stanley agreed to pay US$249.4-million to end years-long criminal and civil investigations into its handling of large stock trades for customers.

“Although the announcement happened in January, we had an estimate of the cost in December,” CFO Yeshaya said.

Net revenue came in at US$12.9-billion compared with analysts’ expectations of US$12.75-billion, according to LSEG data.

Its net income fell to US$1.5-billion, or 85 US cents per diluted share, in the three months ended Dec. 31, compared with US$2.2-billion, or US $1.26 per diluted share, a year ago.

The gain in investment banking driven by M&A advisory was “encouraging,” wrote Chris Kotowski, an analyst at brokerage Oppenheimer.

“We begin 2024 with a clear and consistent business strategy and a unified leadership team,” CEO Ted Pick said. “We are focused on achieving our long-term financial goals and continuing to deliver for shareholders.”

For the full year, net revenue came in at US$54.1-billion compared with US$53.7-billion a year ago. Net income fell to US$5.18 per diluted share versus US$6.15 per diluted share, a year ago.

The results compare with fellow Wall Street giants that reported lower profit on Friday, clouded by special charges and job cuts.

Shell (SHEL-N) dipped 3.2 per cent after revealing it is set to conclude nearly a century of operations in Nigerian onshore oil and gas after agreeing to sell its subsidiary there to a consortium of five mostly local companies for up to $2.4-billion.

The British energy giant pioneered Nigeria’s oil and gas business beginning in the 1930s. It has struggled for years with hundreds of onshore oil spills as a result of theft, sabotage and operational issues that led to costly repairs and high-profile lawsuits.

Since 2021, Shell has sought to sell its Nigerian oil and gas business, but will remain active in Nigeria’s more lucrative and less problematic offshore sector.

Shell’s exit is part of a broader retreat by western energy companies from Nigeria as they focus on newer, more profitable operations. Exxon Mobil, Italy’s Eni and Norway’s Equinor have struck deals to sell assets in the country in recent years.

The British major will sell The Shell Petroleum Development Company of Nigeria Limited (SPDC) for a consideration of $1.3-billion, it said in a statement, while the buyers will make an additional payment of up to $1.1-billion relating to prior receivables at completion.

Apple (AAPL-Q) fell 1.2 per cent after offering rare discounts on its iPhones in China on competition pressures, just days after the tech giant was overtaken by Microsoft (MSFT-Q) as the world’s most valuable firm.

The U.S. tech giant cut prices of some iPhones by 5 per cent, its Chinese website showed on Monday. The time-limited promotion, branded as a Lunar New Year event, will last from Jan. 18 through Jan. 21 in a lead-up to the holiday in mid-February.

Sales of Apple’s latest iPhone 15 series of handsets have been far worse than previous models in China.

Microsoft’s stock market value ended a trading session higher than Apple’s for the first time since 2021 on Friday,

Boeing (BA-N) shares fell almost 8 per cent on Tuesday and were set to extend last week’s losses as the U.S. grounding of some 737 MAX 9 jets entered its 11th day, while the company’s promise of further quality checks raised the specter of added costs.

The planemaker has been engulfed in a crisis since an Alaska Airlines MAX 9 jet made an emergency landing following a cabin panel blowout earlier this month, following which the U.S. Federal Aviation Administration (FAA) temporarily grounded 171 aircraft for safety checks.

Shares of beleaguered supplier Spirit AeroSystems (SPR-N), which made the fuselage for the affected jet, were also down on Tuesday following last week’s 14.1-per-cent loss. U.S. markets were closed for the Martin Luther King Jr. holiday on Monday.

The FAA said on Friday it will audit the MAX 9 production line and suppliers, and consider having an independent entity take over from Boeing certain aspects of certifying the safety of new aircraft that the regulator previously assigned to the planemaker.

“With FAA taking a closer look into Boeing’s production, we think the risk of production/delivery impact increases significantly,” Wells Fargo analyst Matthew Akers said, as he cut his rating on the planemaker’s shares to “equal weight” from “overweight.”

“Given Boeing’s recent track record, and greater incentive for FAA to find problems, we think the odds of a clean audit are low.”

Before Akers’ downgrade, 25 analysts had a “buy” or higher rating, while six had a “hold” rating, according to LSEG data. No analysts have recommended investors to sell Boeing shares.

With files from staff and wires

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 16/04/24 4:00pm EDT.

SymbolName% changeLast
AAPL-Q
Apple Inc
-1.92%169.38
ANSS-Q
Ansys Inc
-0.41%326.81
ABX-T
Barrick Gold Corp
-4.96%22.78
BA-N
Boeing Company
+1.63%170.55
TAST-Q
Carrols Rstrnt Group
0%9.49
FM-T
First Quantum Minerals Ltd
+4.1%15.47
GS-N
Goldman Sachs Group
-1%396.86
MS-N
Morgan Stanley
+2.47%89.14
QSR-T
Restaurant Brands International Inc
+0.64%97.84
SHEL-N
Royal Dutch Shell Plc ADR
-1.22%71.06
SPR-N
Spirit Aerosystems Holdings
+0.99%33.74
SNPS-Q
Synopsys Inc
-0.52%541.09
TECK-B-T
Teck Resources Ltd Cl B
-1.11%65.11
TSLA-Q
Tesla Inc
-2.71%157.11

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