A roundup of some of the North American equities making moves in both directions
On the rise
Following a late Tuesday’s announcement of the acquisition of a Texas facility for US$300-million, shares of West Fraser Timber Co. Ltd. (WFG-T) were higher.
The purchase from Angelina Forest Products will be funded with cash on hand and is expected to close after receiving U.S. regulatory approvals.
The Vancouver-based company will provide further details about the transaction during its third-quarter earnings call on Oct. 28.
Annual synergies are expected to reach about US$13-million within two years.
The facility, which produces southern yellow pine lumber products, has been in operation for about two years and is expected to reach full capacity of about 305 million board feet in the next three to four years.
Uranium company Cameco Corp. (CCO-T) was higher after saying it is exploring ways to partner with Terrestrial Energy on possible future deployments of nuclear power plants in North America and around the world.
The two companies have signed a non-binding memorandum of understanding that could see Saskatoon-based Cameco supply uranium, fuel and supplies for Oakville, Ont.-based Terrestrial’s Integrated Molten Salt Reactor (IMSR) nuclear power plants.
The companies are also investigating the potential of Cameco’s Port Hope uranium conversion facility in southern Ontario for IMSR fuel supply.
Cameco is one of the world’s largest producers of uranium fuel for nuclear power generation, including supplying fuel and fuel assemblies for CANDU reactors in Canada and abroad.
Terrestrial Energy is a nuclear technology company that says it has developed a 50 per cent improvement in the efficiency of nuclear power generation.
The Terrestrial Energy IMSR power plant is one of three small modular reactor (SMR) power plant designs under consideration for deployment at Ontario Power Generation’s (OPG) Darlington Nuclear Generating Station. Terrestrial says its Oakville operation represents the largest SMR power plant technology development project in Canada.
BlackRock Inc. (BLK-N), the world’s largest money manager, was higher in the wake of beating third-quarter profit estimates as an improving economy helped boost its assets under management, driving up fee income.
Asset managers have benefited from rising global financial markets in recent quarters as investors put money to work, making the most of the post-pandemic economic reopening, driven by progress on vaccinations and strong fiscal and monetary aid.
BlackRock ended the past quarter with US$9.46-trillion in assets under management, up from US$7.81-trillion a year earlier.
The fund manager’s size and reach into every corner of the market, equity, fixed income, multi-asset and alternatives, places it in a favorable position relative to smaller peers, analysts said.
Revenue rose 16 per cent to US$5.05-billion, driven by growth in revenue from its technology services segment which offset a drop in performance fees during the quarter.
BlackRock long-term net flows for the quarter stood at US$98-billion, same as last year, but organic inflows exceeded the fund manager’s 5% target for a sixth consecutive quarter.
“Organic growth was broad-based, spanning our active platform as well as in each of our ETF (exchange traded fund) product categories,” BlackRock CEO Larry Fink said.
Adjusted net income rose 19 per cent to US$1.69-billion, or US$10.95 per share, in the quarter ended Sept. 30 from a year earlier.
Analysts on average were expecting the company to report a profit of US$9.35 per share, according to IBES data from Refinitiv.
Draftkings Inc. (DKNG-Q) was higher in the wake of announcing it has agreed to a deal to become an Official Sports Betting, Daily Fantasy Sports and iGaming Partner of the National Hockey League in the United States.
Concurrently, it has also reached an agreement with Turner Sports, which has just begun a seven-year broadcast deal with the league, to be the sportsbook and daily fantasy sports provider for their coverage.
On the decline
Apple Inc. (AAPL-Q) lost ground after Bloomberg News reported it is likely to slash production of its iPhone 13 by as many as 10 million units due to the global chip shortage.
The company was expected to produce 90 million units of the new iPhone models by the end of this year, according to Bloomberg. The report said Apple told its manufacturers that the number of units would be lower because chip suppliers including Broadcom Inc and Texas Instruments are struggling to deliver components.
Shares of Texas Instruments (TXN-Q) and Broadcom (AVGO-Q) were both down as well.
In July, Apple forecast slowing revenue growth and said the chip shortage, which had started hitting its ability to sell Macs and iPads, would also crimp iPhone production. Texas Instruments also gave a soft revenue outlook that month, hinting on chip supply concerns for the rest of the year.
The chip crunch has put immense pressure on industries from automobiles to electronics, leading many automakers to temporarily suspend production.
With its massive purchasing power and long-term supply agreements with chip vendors, Apple has weathered the supply crunch better than many other companies, leading some analysts to forecast that iPhone 13 models released in September would have a strong sales year as consumers looked to upgrade devices for 5G networks.
Jeff Fieldhack, research director for Counterpoint Research, said the reported Apple production cut could also be part of the iPhone maker’s normal launch process of over-ordering devices to be prepared for an initial customer rush and then trimming orders as sales trends become clearer.
Fieldhack said iPhone 13 sales appear to be healthy and higher than last year’s iPhone 12, and Counterpoint is not changing its estimate of 85 million to 90 million iPhone 13 sales for the fourth quarter.
JPMorgan Chase & Co. (JPM-N) was lower after it posted a bigger-than-expected 24-per-cent jump in quarterly profit on Wednesday as it released more loan loss reserves in signs of an improving economy, while a global dealmaking boom led to record fees from advising on mergers and acquisitions.
The largest U.S. bank, whose fortunes reflect the health of the economy, said robust M&A activity and a strong performance from underwriting initial public offerings (IPOs) offset a slowdown in trading in the third quarter.
Fees from advising on deals almost tripled, while its asset and wealth management unit also registered strong growth.
“JPMorgan Chase delivered strong results as the economy continues to show good growth - despite the dampening effect of the Delta variant and supply chain disruptions,” said JPMorgan Chief Executive Jamie Dimon.
JPMorgan’s net income rose to US$11.7-billion, or US$3.74 per share, in the quarter ended Sept. 30, compared with US$9.4-billion, or US$2.92 per share, a year earlier.
Analysts on average had expected earnings of US$3.00 per share, according to Refinitiv.
Wall Street banking has remained strong for most of the past year, as large, cash-flush financial sponsors and corporates embarked on a dealmaking spree, helping drive up investment banking fees at the largest Wall Street banks to record levels.
Overall revenue rose 2 per cent to US$30.44-billion in the quarter. Analysts on average were expecting revenue of US$29.76-billion.
Delta Air Lines Inc. (DAL-N) was down in the wake of warning of a pre-tax loss for the fourth quarter due to a sharp rise in fuel prices.
Oil prices have surged to hit multi-year highs, threatening the pace of a recovery in the airline industry. Fuel costs alone accounted for nearly 20 per cent of Delta’s adjusted operating expenses in the third quarter.
The carrier, however, expects to benefit from strong holiday demand and an improvement in international and corporate travel as the United States reopens its borders in November to fully vaccinated travelers from 33 countries, including China and most of Europe.
“Going into 2022, investors seem likely to ponder the pace of the demand recovery, especially on the Trans-Atlantic corridor, balanced against recent crude oil price pressure,” Citi analyst Stephen Trent said in a pre-earnings note.
Third-quarter revenue from transatlantic travel was at 35% level of the comparable period in 2019, the airline said.
Delta, the first major U.S. airline to report financial results, forecast adjusted fuel price per gallon of between US$2.25 and US$2.40 for the fourth quarter. The adjusted fuel price per gallon was US$1.94 in the latest quarter.
Adjusted operating revenue for the third quarter fell 34 per cent to US$8.28-billion from 2019 as a fast-spreading Delta variant cut demand for air travel in August and early September.
Net income fell to US$1.21-billion, or US$1.89 per share, in the three months ended Sept. 30 from US$1.50-billion, or US$2.31 per share, in 2019.
Excluding items, the company earned US$194-million, or 30 US cents per share.
With files from staff and wires
David Leeder