A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of Micron Technology Inc. (MU-Q) were up 13.5 per cent after the U.S. chip maker announced it has resumed some shipments to China’s Huawei Co Ltd and reaffirmed the expectation that demand for its chips will recover later this year.
“We determined that we could lawfully resume shipping a subset of current products because they are not subject to export administration regulations and entity list restrictions,” Chief Executive Sanjay Mehrotra said on a conference call with investors.
“However, there is considerable ongoing uncertainty surrounding the Huawei situation, and we are unable to predict the volumes or time periods over which we will be able to ship products to Huawei.”
After the bell on Tuesday, the reported better-than-expected quarterly results.
In response to the news, Needham analyst Rajvindra Gill upgraded Micron shares.
He said: “The company has seen normalizing inventory levels in the cloud, graphics, and PC end markets, as customers digest excess inventory. Another significant tailwind is MU’s resumption of shipments of certain products to Huawei in the last 2 weeks.”
In the wake of better-than-anticipated fourth-quarter financial results, FedEx Corp. (FDX-N) shares rose 2.5 per cent, despite a warning about the effects of the trade dispute with China and the non-renewal of its contract with Amazon on it its fiscal 2020 performance.
For the quarter, the company reported revenue of US$17.8-billion and earnings per share of US$5.01. The Street had projected $17.79-billion and US$4.85.
Citi analyst Christian Wetherbee said: “FedEx reported F4Q19 results that were better than expected, with each segment beating our targets. That said, the outlook for F2020 was the main event and was in line with lower buyside expectations in the range of $14-$15. We’re not suggesting it’s a win, but we believe that with sentiment at close to an all-time low, in our opinion, it appears to be realistic enough to provide some degree of floor in expectations. That said, FedEx has evolved its approach to the market, focusing now on growth and density in ecommerce, which was something it minimized a few years ago. This move, which UPS has also embraced, means parcel likely faces ongoing headwinds to margins absent a shock. We believe FedEx continues to hold potential from TNT, which coupled with washed out expectations and valuation keeps us Buy rated, but it faces challenges, particularly in F1H20.”
Tucows Inc. (TC-T) rose 0.8 per cent after New York-based Kerrisdale Capital revealed a short position in the company, calling it “an internet services and telecommunications company that consists of two declining internet businesses and a nascent fiber business with high capex requirements and unrealistic profit expectations.”
“Kerrisdale believes that Tucows will report a miss versus consensus 2019 EBITDA and that the stock is worth 50%+ less than the current price,” said the private investment manager.
On the decline
Shares of BlackBerry Ltd. (BB-T) fell 9.1 per cent on Wednesday despite the software maker exceeding the Street’s first-quarter revenue expectations, as investor express concern over weak demand for its security software from firms and government agencies,.
The Waterloo, Ont.-based company’s adjusted revenue rose 23 per cent to $267-million in the quarter, beating estimates of $265-million. Its net loss narrowed to $35-million, or 9 cents per share, in the quarter ended May 31, from $60-million, or 11 cents per share, a year earlier.
But revenue from its Internet of Things business, which houses its enterprise software and technology solutions, rose only 5 per cent to $137-million, coming in below estimates of $151.4-million.
In a research note, Raymond James analyst Steven Li called the results “soft,” noting: “On a non-GAAP basis (excluding Cylance), revenue was down slightly year-over-year. Relative to our forecasts, IOT (Enterprise Software & BTS) appeared to have underperformed ($137-million, down sequentially from $145-million in F4Q19). Given BTS revenue stream is typically stable and growing, any shortfall would have been from Enterprise Software. Licensing showed upside ($72-million vs. our $61-million).”
Separately, BlackBerry announced it is expanding its partnership with LG Electronics Inc. to accelerate the deployment of connected and autonomous vehicle technology for automotive OEMs and suppliers around the world.
Mandalay Resources Corp. (MND-T) lost 7.1 per cent after it announced a non-binding “heads of agreement” with Equus Mining that gives Equus a three-year period to explore at the 29,495 hectare Cerro Bayo mine in Chile.
The agreement “contemplates an option period in which Equus can exercise its option to acquire all the issued share capital of Compania Minera Cerro Bayo Ldta., including its mining properties, resources and mine infrastructure at Cerro Bayo, as well as the 1,500 [tonne per day] processing plant, which is currently on care and maintenance,” the company stated. It said the agreement has a condition that at 18 months both parties have the right to terminate the agreement.
Following the release of a better-than-anticipated revenue result for the third quarter before the bell on Wednesday, shares of Corus Entertainment Inc. (CJR-B-T) erased early gains and sat 3.8 per cent lower.
The Toronto-based media and content company reported revenue for the quarter of $458.4-million, exceeding the consensus expectation on the Street of $452.4-million. Adjusted earnings per share of 31 cents fell 3 cents below the consensus.
“Corus delivered a third consecutive quarter of consolidated revenue growth, driven primarily by a double-digit increase in Television advertising, partially offset by lower subscriber revenues and softness in our radio segment,” said president and chief executive officer Doug Murphy. “Significant innovations such as the debut of STACKTV on Amazon Prime Video Channels and expansion of Corus’ social and digital content offerings, combined with our robust new slate of owned content and a strong programming line-up demonstrate our commitment to optimize our core business and build for the future. Importantly, these strong Q3 results have enabled us to achieve our leverage target one quarter ahead of our goal, once again improving our financial flexibility.”
Mr. Hochholdinger is the latest in a string of high-profile executives to leave Tesla over the past two years as the electric car maker struggles to ramp up production of Model 3 sedan, which is seen as crucial for its long-term profitability.
On, Tuesday, Electrek reported that the electric-car maker has so far delivered 49,000 vehicles in North America during the second quarter, threatening its goal of a new record.
Chief Executive Officer Elon Musk had said last month that the company was on course to deliver a record number of cars in the quarter, beating the 90,700 it sent to customers in the final quarter of last year.
A day after its stock jumped jumped 2.7 per cent after striking a deal to sell its money-losing regional jet program to Japan’s Mitsubishi Heavy Industries, Bombardier Inc. (BBD-B-T) finished flat despite Bombardier Transportation announced a new contract with the City and County of San Francisco to provide ten years of operations and maintenance services for the INNOVIA APM 100 automated people mover (APM) system at San Francisco International Airport.
The contract is valued at US$220-million and includes an option for an additional five years.
On a day that saw gold prices falling, Barrick Gold Corp. (ABX-T) dipped 1.3 per cent after saying Wednesday some assumptions made by Acacia Mining about its mine plans were not supportable and needed adjustments.
Acacia Mining had on Monday strongly disagreed with majority shareholder Barrick Gold’s valuation of the company, saying Barrick’s proposal undervalued its life of mine plans and appears to have ignored the value of its exploration and development assets.
General Mills Inc. (GIS-N) fell 4.4 per cent on weaker-than-anticipated quarterly sales results, as a lower demand for snack products was seen in North America.
Net sales rose 7 per cent to US$4.16 -billion, but missed the average analyst estimate of US$4.24-billion.
The company earned 83 US cents per share, excluding one-time items, above the estimate of 77 US cents.
With files from Brenda Bouw, staff and wires