A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of Cronos Group Inc. (CRON-T, CRON-Q) jumped 11.6 per cent on Wednesday after an equity analyst at Bank of America Merrill Lynch raised his rating for its stock by two notches after chief executive officer Mike Gorenstein said the cannabis producer is aiming to be “aggressive” in its cannabidiol (CBD) launch in the United States.
“While clearly a high multiple even vs peers, following recent mgmt comments, we have improved confidence CRON is near announcing its launch, in our view a significant catalyst,” said Mike Gorenstein.
Bombardier Inc. (BBD-B-T) was up 9.7 per cent in reaction to an announcement by Japan’s Mitsubishi Heavy Industries Ltd that it is holding talks to buy its CRJ program, in a deal that would shake up the market for regional jets with fewer than 100 seats.
Earlier, Air Current reported that Mitsubishi Heavy was in advanced negotiations with Bombardier and that an announcement could come as soon as the Paris Air Show, which starts June 17, if a deal is finalized.
In a research note, Desjardins Securities analyst Benoit Poirier said: “Overall, we would be pleased with a divestiture of the CRJ program, as it would enable BBD to further simplify its aviation business while unlocking additional capital to solidify its balance sheet; recall that the CRJ program is not profitable for BBD. We would favour eventual capital deployment toward buying back the CDPQ’s stake in BT or toward the business jet division. ... BBD’s decision to sell its aerostructures business in Morocco (key supplier for the program) could be an indication that it is looking for a potential buyer for the CRJ program. In terms of valuation, we believe BBD could unlock US$500–1,000-million from a potential sale to a strategic buyer such as Mitsubishi.”
Transat At Inc (TRZ-T) shares were up almost 12 per cent a day after Group Mach Inc. went public on Tuesday with a conditional offer of $14 a share for the Montreal-based airline and travel company.
Mr. Poirier said: “Overall, while the proposed transaction might be interesting for CDPQ and FTQ [which own 5.8 per cent and 11.6 per cent of total shares, respectively] in view of the opportunity to participate in the long-term value creation arising from TRZ’s hotel strategy, we believe [Air Canada] could ultimately offer a better price for TRZ given the strong rationale behind the transaction and the potential for cost synergies with its operations. It will be interesting to see if TRZ terminates its LOI with AC now that it has received a firm offer from Mach.”
Seabridge Gold Inc. (SEA-T) sat 0.7 per cent higher following a premarket announcement that it has entered into a definitive agreement to acquire a 100-per-cent interest in the Goldstorm Project in northern Nevada from Mountain View Gold Corp. for 25,000 common shares.
The Goldstorm property consists of 134 mining claims and 1,160 leased acres (totaling approximately 15.9 square kilometres) and is located 3 kilometres east of Seabridge’s 100-per-cent-owned Snowstorm Property.
“Snowstorm is a very valuable exploration asset for us and it will be a primary focus for our exploration team this year, including our first drill program on the project expected to begin later this summer," said chairman and CEO Rudi Fronk. "In preparation, we have staked additional claims where available. The Goldstorm purchase fits our strategy of expanding our footprint in these highly prospective gold trends where we intend to be a significant player.”
A day after its Investor Day event in Toronto, Canadian National Railway Co. (CNR-T) shares rose 1.3 per cent.
RBC Dominion Securities analyst Walter Spracklin, who lowered his target price for its stock, said: “CN’s Investor Day provided both a strategic overview and updated financial targets (the updated guidance led to only minor changes to our estimates). Elements of focus were technology; people; and growth - important because each has seen some investor pushback. We see the event as successfully providing key insights into each - which we believe will help allay concerns regarding the company’s long-term growth strategy.”
Jamieson Wellness Inc. (JWEL-T) was up 1.7 per cent despite announcing it has received three additional product licences from the FDA in China.
The licences add to the Company’s six existing licences, allowing the products to be sold in the Chinese domestic retail and e-commerce markets.
“Tapping the domestic market in China is an exciting opportunity for us, and a key part of our international growth platform,” said CEO Mark Hornick. “Our goal is to have 15-20 products available in the domestic market in China by the end of 2019, and these new licences keep us nicely on-track to meet that expectation.”
On the decline
Mullen Group Ltd. (MTL-T) was down 035 per cent after increasing its previously announced bought deal offering of 5.75-per-cent convertible debentures from $75-million to $110-million.
The Oktoks, Alta.-based company plans to use the proceeds for general corporate purposes, which may include future acquisitions in their Trucking/Logistics segment.
Descartes Systems Group Inc. (DSG-T) slipped 5.7 per cent following an announcement on Tuesday after the bell that it has commenced a marketed, underwritten public offering of 6,000,000 common shares. The Company said it expects to grant the underwriting group of Barclays and RBC Capital Markets an option to purchase up to 900,000 additional common shares.
With files from staff and wires
David Leeder