A roundup of some of the North American equities making moves in both directions today
On the rise
Cannabis company Tilray Inc. (TLRY-T) rose on Wednesday after saying it has signed a deal to buy Breckenridge Distillery, a Colorado-based producer of whiskey and other spirits.
Financial terms of the agreement were not immediately available.
Founded in 2008, Tilray said the Breckenridge Distillery is known for its blended bourbon whiskey, a high-rye mash American-style whiskey.
Tilray already owns SweetWater Brewing Co. in the U.S.
The company said the Breckenridge deal helps grow its business with infrastructure and a larger footprint in the U.S. market where it hopes the federal government will ease its prohibitions on recreational cannabis.
It said once it becomes permissible it believes Breckenridge will help it develop non-alcoholic distilled spirits that are infused with cannabis.
U.S. travel and leisure stocks surged on Wednesday after BioNtech SE and Pfizer Inc said a three-shot course of their COVID-19 vaccine was able to neutralize the new Omicron variant.
Shares of U.S. airlines - including Delta Air Lines Inc. (DAL-N), United Airlines Holdings Inc (UAL-Q), and American Airlines Group Inc. (AAL-Q) rose.
Their shares were also helped by Southwest’s forecast of posting a profit in the fourth quarter as opposed to its earlier projections of a loss on a rebound in travel across the United States and higher fares.
Hotel chains Hyatt Hotels Corp. (H-N), Marriott International Inc. (MAR-Q), and Hilton Worldwide Holdings Inc. (HLT-N) were up, while travel booking websites Expedia Group Inc. (EXPE-Q) and Booking Holdings Inc. (BKNG-Q) also rose.
“Just because the variant is more vaccine resistant doesn’t mean vaccines are now useless. That is building a more positive picture than what we were facing last Friday,” said Craig Erlam, senior market analyst at Oanda.
Conversely, Southwest Airlines (LUV-N) dipped after saying on Wednesday that it was expecting to be profitable in the fourth quarter on the back of stronger travel demand and fares.
It had previously forecast a loss for the quarter, citing mounting costs.
The Texas-based carrier, which has had to cancel flights en masse partly due to staff shortages, said it was aiming to be “solidly” profitable in all the quarters of 2022 by ensuring adequate staffing as well as restoring operational reliability.
Southwest’s upbeat outlook comes at a time when the airline industry is grappling with the uncertainty caused by the Omicron coronavirus variant. The flurry of new testing rules and border closings has raised concerns ahead of the important Christmas travel season.
The company said leisure bookings for December travel are exceeding its expectations. Business travel demand, however, remains depressed.
Campbell Soup Co. (CPB-N) rose despite missing market expectations for quarterly revenue on Wednesday, as consumers headed out to restaurants after COVID-19 curbs eased, impacting sales of the company’s ready-to-eat meals and soups.
Packaged food makers were among the biggest pandemic winners last year as stuck-at-home consumers stocked up on cooking essentials and snacks, as they took to dining at home after the health crisis shuttered outdoor eateries across the world.
As economies reopen, however, more consumers are flocking back to restaurants and cooking less at home, causing demand for packaged foods to recede from last year’s peak.
Campbell Soup’s net sales fell to US$2.24-billion in the first quarter ended Oct. 31, from US$2.34-billion a year earlier. Analysts were expecting revenue of US$2.28-billion, according to Refinitiv IBES data.
Net earnings attributable to the company fell to US$261-million, or 86 US cents per share, from US$309-million, or US$1.02 per share, a year earlier.
Online brokerage Robinhood Markets Inc. (HOOD-Q) gained after saying late Tuesday it was seeking a termination of the resale of its common shares by certain investors including affiliates of venture capital firms Andreessen Horowitz and Ribbit.
Robinhood said it had been under a contractual obligation to let those early shareholders exit some of their stake but was now seeking a termination as the obligation had expired.
In a regulatory filing in August, Robinhood had registered for the sale of nearly 98 million shares by early shareholders including ICONIQ Capital and Index Ventures, and noted that it would not receive any of the proceeds.
That had angered some retail investors, who groused in online forums such as Reddit’s WallStreetBets.
On the decline
Nuvei Corp. (NVEI-T) plummeted after Spruce Point Capital Management issued a “strong sell” rating, saying it sees a 40-60-per-cent downside risk, mainly due to “shady business practices.”
The New York-based investment management firm said the Canadian payments tech company has “covered up a pattern of business failures, lack of organic growth, and a web of relationships with individuals connected to major Ponzi Schemes and alleged fraudulent activities.”
Spruce Point also challenges Nuvei’s acquisitions, leadership choices and claims.
“Conspicuously absent from the narrative is that CEO Phil Fayer operated PaySystems. PaySystems collapsed, leaving aggrieved merchant customers across North America without their money, and multiple claims of fraud by CEO Fayer,” it said. “During this time period, we have evidence that Fayer embellished his educational credentials by falsely claiming he graduated from Concordia University. From 2010-2018, we have evidence that Pivotal wasn’t growing until a new round of private capital and a shift toward European acquisitions. Now on its third rebrand, Nuvei is reporting remarkable financial success, wildly expanded margins at its European targets, and cash flow after years of operating in the red. Meanwhile, we believe it is under pressure and declining organically in North America.”
Shares of Dollarama Inc. (DOL-T) dipped after it beat Wall Street expectations for quarterly profit on Wednesday as the discount store operator benefited from strong demand for its higher-margin seasonal products, such as Halloween decorations and candy.
Krashinsky Robertson: Dollarama profit jumps 13% as Halloween demand offsets supply-chain headaches
Customers have started spending on decor and party supplies as a majority of the Canadian population is vaccinated, allowing get-togethers and social events to take place.
Total sales rose to $1.12-billion in the quarter, from $1.06-billion a year earlier, Dollarama said.
The company’s net income rose to $183.4-million, or 61 cents per share, in the quarter ended Oct. 31, from $161.9-million, or 52 cents per share a year earlier.
Analysts were expecting the company to earn 57 cents per share, according to Refinitiv IBES data.
Cenovus Energy Inc. (CVE-T) turned negative on Wednesday with it forecasting slightly higher capital expenditure and production next year, as the Calgary-based company bets on a sustained recovery in energy prices with crude climbing over US$70 a barrel.
Canada’s oil sands are inching toward record production, as the country’s biggest producers squeeze more barrels out of existing assets, but they are still holding back on large spends despite oil prices at their highest in recent years.
Cenovus forecast 2022 spending between $2.6-billion and $3-billion, higher than $2.3-billion to $2.7-billion expected in 2021.
It also reaffirmed its commitment to grow investor returns, with planned allocation of about 50 per cent of excess free fund flows in 2022 to shareholders, including a repurchase of up to 146.5 million common shares.
The company said last month it intends to buy back up to 10 per cent of its public float and double its dividend. Cenovus, which agreed to buy rival Husky last year to create Canada’s No. 3 oil and gas producer expects production of 780,000 barrels of oil equivalent per day (boepd) to 820,000 boepd next year, a 4-per-cent increase compared with the 2021 outlook.
While throughput or the amount of crude processed forecast for full-year 2022 is expected between 530,000 barrels per day (bpd) and 580,000 bpd, 6 per cent higher than 2021 expectations.
Cenovus, part of the Canadian oil sands producers alliance formed in June to achieve net-zero greenhouse gas (GHG) emissions from their operations by 2050, plans for a 35-per-cent reduction in absolute GHG by the end of 2035.
Empire Company Ltd. (EMP-A-T) was lower after an equity analyst at BMO Nesbitt Burns downgraded its stock, expressing concern about the impact of slowing ecommerce growth on its Voilà grocery delivery service.
“Until more clarity surfaces regarding Voilà's financial outlook, we are concerned that the potential losses will suppress the stock price performance relative to peers,” said Peter Sklar.
National Bank of Canada (NA-T) was narrowly lower on the premarket announcement of the approval of a new normal course issuer bid to purchase for cancellation up to 7 million of its common shares, representing approximately 2 per cent of the public float as at Nov. 30.
“The normal course issuer bid will provide the Bank with additional flexibility to manage capital and generate value for shareholders,” it said.
See also: COVID-19 pandemic finally takes financial toll on Canada’s big banks
Pfizer Inc. (PFE-N) gave back early gains after it said Wednesday that a booster dose of its COVID-19 vaccine may offer important protection against the new omicron variant even though the initial two doses appear significantly less effective.
Pfizer and its partner BioNTech (BNTX-Q) said that while two doses may not be protective enough to prevent infection, lab tests showed a booster increased by 25-fold people’s levels of virus-fighting antibodies.
Blood samples taken a month after a booster showed people harbored levels of omicron-neutralizing antibodies that were similar to amounts proven protective against earlier variants after two doses.
Scientists don’t yet know how big a threat the omicron variant really is. Currently the extra-contagious delta variant is responsible for most of the COVID-19 cases in the U.S. and other countries.
But the omicron variant, discovered late last month, carries an unusually large number of mutations and scientists are racing to learn how easily it spreads, whether it causes illness that is more serious or milder than other coronavirus types — and how much it might evade the protection of prior vaccinations.
Pfizer’s findings, announced in a press release, are preliminary and haven’t yet undergone scientific review. But they’re the first from a vaccine maker examining whether the booster doses that health authorities are urging people to get may indeed make an important difference.
Explainer: The Omicron COVID-19 variant has sparked global concern and prompted new travel restrictions. Here’s everything you need to know
With files from staff and wires