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A look at North American equities that made moves

On the rise

Shares of TC Energy Corp. (TRP-T) rose after it said on Wednesday it was looking to sell $5-billion worth of assets to repay debt and fund new projects, and reported an 8-per-cent rise in quarterly profit.

Canada, the world’s fourth-largest crude producer, has been seeking ways to boost pipeline utilization following Russia’s invasion of Ukraine, which has strained global oil and natural gas supplies.

TC Energy Chief Executive Francois Poirier said the company planned to raise more than $5-billion through 2023 from selling assets and minority interests.

He said the company also intended to approve $5-billion worth of projects annually throughout the decade.

The asset sales plans are bigger than previously expected, and TC now may reach its goal of reducing debt to less than five times earnings before interest, taxes, depreciation and amortization (EBITDA) two years early, in 2024, Tudor Pickering Holt analyst Matthew Taylor said.

Mr. Poirier told analysts on a call that he would not provide details about what assets TC may sell, but said the company would consider future greenhouse gas emissions in the sales. Infrastructure with stable cash flows and long-term contracts are in strong demand and discussions with potential buyers are ongoing, he said.

Among its projects, TC is building the $11.2-billion Coastal GasLink pipeline to supply Shell PLC-led LNG Canada’s liquefied natural gas export terminal in British Columbia by 2025.

Earnings from TC’s Canadian natural gas pipelines rose to $409-million for the July-September quarter, from $343-million a year earlier.

The Calgary-based company’s net income attributable to common shares stood at $841-million, or 84 cents per share, for the quarter, from $779million, or 80 cents per share, a year earlier.

Rival Enbridge Inc. (ENB-T) also reported higher third-quarter adjusted profit on Friday.

Rogers Communications Inc. (RCI.B-T) was up after beating quarterly revenue expectations as the wireless giant benefited from higher roaming charges due to a rebound in international travel and customers opting for pricier plans.

The carrier added 164,000 monthly bill paying wireless subscribers in the third quarter as its efforts to expand 5G coverage helped attract more customers.

The Toronto Blue Jays owner has also seen a recovery in its media business, thanks to higher ad sales on its networks and the return of live sporting events.

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The company’s total revenue rose to $3.74-billion in the third quarter compared to $3.67-billion a year earlier. Analysts on average were expecting a revenue of $3.73-billion, according to Refinitiv data.

Net income fell to $371-million, or 71 cents per share, from $490-million, or 94 cents per share, a year earlier.

The company incurred a $150-million charge in customer credits during the quarter due to a massive network outage in July.

In a note released before the bell, Desjardins Securities analyst Jerome Dubreuil said: “This morning, RCI reported decent results given the Street appears to have effectively forecast the impact of the July outage. Subscriber numbers were strong in wireless in spite of this event, which demonstrates the strength of the market in general. Despite the outage, the company reiterated its 2022 guidance, which is encouraging; guidance was in line with consensus on revenue and EBITDA, but higher on FCF.”

Stella-Jones Inc. (SJ-T) jumped following the premarket release of better-than-expected third-quarter results.

The reported revenue of $842-million, up 24 per cent year-over-year and above the Street’s forecast of $751-million with gains seen across its three main segments (including 32-per-cent organic growth in Residential Lumber). Adjusted earnings per share of $1.07 beat the consensus estimate by 4 cents.

Calling the results “impressive,” Desjardins Securities analyst Benoit Poirier said: “While management did not introduce a specific outlook for 2022 (moving away from one-year outlooks due to potential short-term fluctuations), SJ had previously targeted stable EBITDA vs 2021 (consensus for 2022 of $431-million; we were at $435-million). However, it did reiterate its 2022‒24 long-term guidance; it is looking to generate mid-single-digit annual revenue growth vs 2019 levels (pre-pandemic) through 2024, with an EBITDA margin of 15 per cent. Management is also assuming residential lumber sales of 35 per cent above pre-pandemic levels over the period, which implies that these will account for 20–25 per cent of total revenue by 2024 (vs 28 per cent in 2021).”

“Overall, we are very pleased with the 3Q results.”

EQB Inc. (EQB-T) was higher as it reported third-quarter revenue of $195.7-million after the bell on Tuesday, up from $162-million a year ago. Revenue after provision for credit losses for $190.4-million versus $165.6-million a year ago, the company stated.

Net income of $76.5-million or $2.22 per share compared to $71.4-million or $2.07 per share a year earlier. The expectation was for EPS to come in at $2.13 in the latest quarter, according to S&P Capital IQ.

EQB said it provisioned $5.4-million for credit losses in the third quarter “to account for continued portfolio growth, evolving macroeconomic forecasts and loss modelling that contemplates further increases in interest rates plus various scenarios for economic performance.”

It said net impaired loans were 0.23 per cent of total assets of Sept. 30, up from 0.18 per cent on June 30, “but still lower than the prior eight quarters.”

Total convention loans, including personal and business, grew 29 per cent to $25.1-billion. It said reverse mortgage assets grew the most, or 194 per cent year-over-year, to $514-million. “Growth reflected expanded distribution, increasing brand awareness among those Canadians nearing or in retirement, and market growth,” the company stated.

Raymond James analyst Stephen Boland said: “Overall, this was a strong quarter. EQB reported adjusted EPS of $2.35 vs RJL at $2.23 and consensus at $2.11. Net Interest Margin (NIM) was well above street expectations and drove the bulk of the beat. The 14 basis points expansion quarter-over-quarter was unexpected as rising deposit costs could have pressured NIM until interest rates stabilized. However, EQB is clearly benefiting from recent initiatives to diversify its funding sources and lower its overall cost of capital. Even more positively, further NIM improvement is expected as loans continue to renew at higher yields. We suspect this will be positively received by investors despite concerns around slowing loan growth and the overall credit environment.”

Pot producer Canopy Growth Corp. (WEED-T) reported a smaller second-quarter core loss on Wednesday on the back of higher sales and cost-cutting measures, sending the company’s shares up.

The company has been doubling down on its efforts to turn profitable, including cost cuts through layoffs, exits from some international markets, store closures and divestiture of its retail business across Canada.

Canopy’s quarterly gross margins improved from a year earlier, helped by lower costs and a decrease in inventory charges.

Last month, the company said it will create a holding company to fast track its entry into the United States, which is projected to be a more than $50-billion market by 2026.

U.S. President Joe Biden has recently sought a review on marijuana classification. A potential change in legislation is expected to benefit cannabis producers further, and support for marijuana legalization has been steadily growing in the country.

“I hope the U.S. midterm results will further push the Senate to act swiftly on cannabis reform,” Canopy Chief Executive David Klein said.

The company posted revenue of $117.9-million, compared with estimates of $113.13-million, according to Refinitiv IBES data.

Higher sales at Canopy’s BioSteel business, which sells sports and health drinks, offset the impact of increased competition in the Canadian recreational-use cannabis market and the effect of divestitures, according to the company.

Canopy reported an adjusted core loss of $78.1-million in the second quarter, compared with a loss of $162.6-million a year earlier

CGI Inc. (GIB.A-T) increased after saying it earned a fourth-quarter profit of $362.4-million, up from $345.9-million in the same quarter last year as its revenue rose eight per cent compared with a year ago.

The business and technology consulting firm says the profit amounted to $1.51 per diluted share for the quarter ended Sept. 30, up from a profit of $1.39 per diluted share in the same quarter last year.

Revenue for the three-month period totalled $3.25-billion, up from $3.01-billion a year earlier.

The company says its revenue was up 13.9 per cent compared with a year ago, when excluding $177.9-million of unfavourable foreign currency impact.

Excluding specific items, CGI says it earned $1.56 per diluted share in its latest quarter, up from $1.40 per diluted share in its fourth quarter last year.

Analysts on average had expected a profit of $1.55 per share and nearly $3.21 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.

In a research note released midday on Wednesday, National Bank’s Richard Tse said: “Bottom line, despite macro headwinds which have the potential to moderate spend on digital transformation projects in the near term, we believe CGI’s market position and operating prowess offer outsized resilience in the current market and as such, we see the name offering a relative opportunity in a volatile (tech) market.”

Meta Platforms Inc. (META-Q) jumped after it said on Wednesday it would cut more than 11,000 jobs, or 13 per cent of its workforce, in one of the year’s biggest layoffs as the Facebook parent battles soaring costs from its push into the metaverse amid a weak advertising market.

The mass layoffs, the first in Meta’s 18-year history, follow thousands of job cuts at other major tech companies including Elon Musk-owned Twitter and Microsoft Corp.

The pandemic-led boom that boosted tech companies and their valuations has turned into a bust this year in the face of decades-high inflation and rapidly rising interest rates.

“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” Chief Executive Officer Mark Zuckerberg said in a message to employees.

“I got this wrong, and I take responsibility for that.”

The company also plans to cut discretionary spending and extend its hiring freeze through the first quarter. But it did not specify the impacted regions or the expected cost savings from the moves.

On the decline

Bank of Montreal (BMO-T) was lower after a jury in a Minnesota bankruptcy court found its U.S. arm liable for US$564-million in damages in a lawsuit related to one of the largest Ponzi schemes in history, and the bank will take a $1.1-billion charge as it prepares to appeal the decision.

In a verdict reached on Tuesday, the jury held BMO Harris Bank N.A. – the U.S. subsidiary of BMO – liable for “aiding and abetting breach of fiduciary duty,” according to a court filing.

It awarded US$484-million in compensatory damages as well as nearly US$80-million in punitive damages in favour of the trustee in bankruptcy proceedings for companies controlled by Thomas Joseph Petters, who was convicted in 2008 of leading a nearly $2-billion fraud and was a client of a bank later acquired by BMO.

- James Bradshaw and David Milstead

Intact Financial Corp. (IFC-T) slid in the wake of saying it saw a 23-per-cent rise in net income despite “active weather” and ongoing cost pressures in the quarter.

The insurance company says it had a profit of $370-million for the quarter ending Sept. 30, up from $300-million for the same quarter last year.

Earnings worked out to $2.02 per share, up from $1.60 per share last year, when an impairment charge impacted results.

It says net operating income per share was $2.70, down from $2.87 in the same quarter last year.

The company says the decline was related to inflation pressures and higher weather-related losses in personal lines, partially offset by strong investment and distribution results.

Total revenue was $5.39-billion, up from $5.35-billion for the same quarter a year earlier.

In a research note released before the bell, RBC Dominion Securities analyst Geoffrey Kwan said: “Intact continues to deliver strong fundamentals with Q3/22 results that were largely in line with our forecast and consensus. IFC’s shares have performed well this year and while the implied total return to our target is more modest, given current macro uncertainty, we still view IFC as one of our best ideas reflecting positive company and industry fundamentals; potential catalyst(s); strong defensive attributes and a reasonable valuation.”

Shares in Walt Disney Co. (DIS-N) tumbled to the lowest since March 2020 on Wednesday, as ballooning costs at the entertainment giant’s fast-growing streaming division cast a shadow on strong subscriber additions.

Disney+ has attracted millions of subscribers and will launch an ad-supported tier next month, but executives’ promise of profitability next year and forecast for operating results in the next quarter failed to impress.

The company missed analysts’ expectations for fiscal fourth-quarter earnings, after a US$1.5-billion loss in its streaming division.

“Disney’s streaming results are indicative of the tightrope it is walking,” said Fred Boxa, associate director at technology and management consulting firm Arthur D. Little.

Finance chief Christine McCarthy, in a call with analysts on Tuesday, said the ad tier was not expected to provide a meaningful impact to results until later in Disney’s financial year.

Subscriber growth in Disney+ was expected to accelerate in the second quarter, she added, a sign analysts said indicated a soft first quarter.

“As the platform aims for profitability, it’s placing some of that burden on its user base in the form of price hikes that could stall growth during a time of economic pinch,” said Mike Proulx, research director at Forrester.

A weaker-than-expected full-year revenue growth forecast also dragged shares. Disney estimated a “high single-digit” percentage growth in revenue in this fiscal compared to the last, while the Street was expecting 12-per-cent growth.

At least 10 brokerages cut their price targets on the Disney stock.

Credit Suisse analysts, who by far had the steepest cut of $31, said “the streaming investment cycle coinciding with macro weakness is certainly testing Disney investor patience.”

The median price target on the stock is US$131.50, according to Refinitiv data.

Shares have fallen more than 35 per cent this year, compared with a 20-per-cent drop in the S&P 500, battered by a cautious outlook for ad sales and recessionary fears.

Toronto-based Hut 8 Mining Corp. (HUT-T) dropped further as shares of cryptocurrency and blockchain-related companies saw a second day of sharp declines on Wednesday, as investors continued to fret about the stability of the sector and the financial health of major exchange FTX despite plans for a rescue deal from bigger rival Binance.

Others seeing declines include Galaxy Digital Holdings Ltd. (GLXY-T), Hive Blockchain Technologies Inc. (HIVE-X) and Bitfarms Ltd. (BITF-T).

Crypto giant Binance signed a nonbinding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange.

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The proposed deal between high-profile rivals followed week-long speculation about FTX’s financial health that snowballed into US$6-billion of withdrawals in the 72 hours before Tuesday’s deal, raising questions about the solvency of one of the world’s largest crypto exchanges.

FTX and Binance did not disclose the terms of their agreement, and markets face fresh uncertainty over whether it will proceed.

Bitcoin, the biggest cryptocurrency by market value, was down 5.5% on the day at $17,656, after a 10-per-cent plunge on Tuesday that marked its worst day since mid-August. Ether, the next largest, extended losses on Wednesday to hit its lowest since July.

AbCellera Biologics Inc. (ABCL-Q) was lower with it continuing to cash in on its COVID-19 antibodies, as the Vancouver biotechnology company reported its third $100-million-plus revenue and highly profitable quarter out of the past four Tuesday.

But the company warned its current COVID-19-fighting antibody bebtelovimab, which is sold by partner Eli Lilly & Co. – and which accounted for more than 90 per cent of the Canadian company’s revenue in the quarter – is unlikely to work against the two latest variants of the virus. While the company and Eli Lilly are developing another antibody candidate that they expect will be effective against those variants, AbCellera CEO Carl Hansen said he didn’t yet know if there was “a clear regulatory path for that development.”

Bloom Burton analyst Antonia Borovina cautioned in an email it could take eight to nine months for a follow-up drug to get approval from the U.S. Food and Drug Administration and that it may require more data than early in the pandemic, when the duo’s first COVID-19 antibody, called bamlanivimab – received rapid emergency authorization and was on the market by the end of 2020. That, she said, throws into question how much revenue AbCellera can generate from its COVID-19 treatments, which she had originally expected would bring in US$285-million for AbCellera in 2023.

AbCellera’s quick work to develop and help bring to market COVID-19 antibodies has delivered a bounty of revenues and profits and established it as Canada’s most valuable biotechnology company. The company Tuesday said it generated $101.4-million in revenue during its third quarter ended Sept 30 and a net profit of US$26.6-million. It derived more than 90 per cent revenues from bebtelovimab after Eli Lilly sold 60,000 doses to the U.S. government in the quarter.

That brings AbCellera’s revenue after nine months to US$463.9-million – 93 per cent of that from COVID-19 antibodies - with net income of US$187.4-million. The company generated US$375.2-million in revenue last year and US$233.2-million in 2020 as its ability to rapidly identify COVID-19 antibodies from early patients who developed immunity and partner with a drug giant to get the drugs quickly to market generated windfall results. AbCellera generated net income of US$153.4-million in 2021 and US$118.9-million in 2020 - unusually lucrative results for a 10 year old biotechnology company.

- Sean Silcoff

Tesla Inc. (TSLA-Q) slid to their lowest level in over 20 months on Wednesday after Chief Executive Elon Musk sold US$3.95-billion worth of shares in the electric-vehicle maker.

The latest sale brings total Tesla stocks sold by Musk to about US$36-billion since November last year, leaving him with a roughly 14-per-cent stake in the world’s most valuable automaker, according to a Reuters calculation.

Musk unloaded 19.5 million shares between Friday and Tuesday, filings published by the U.S. Securities and Exchange Commission showed on late Tuesday.

Analysts had widely expected Musk to sell more Tesla shares to finance the Twitter deal even though the world’s richest man had asserted several times that he was done selling Tesla stock.

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He sold US$6.9-billion worth of Tesla shares in August and had amassed about US$20-billion in cash through multiple stake sales from November last year to August.

This would have left him in need to raise an additional US$2-billion to US$3-billion to finance the Twitter deal, according to a Reuters calculation.

The billionaire last month closed the deal with US$13-billion in loans from banks and a US$33.5-billion equity commitment, which included his 9.6-per-cent Twitter stake worth US$4-billion and US$7.1-billion from investors including Oracle Corp co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.

The company has lost nearly half its market value ever since Musk bid for Twitter in April.

With files from Brenda Bouw, staff and wires