A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of Fire & Flower Holdings Corp. (FAF-X) jumped 13.2 per cent after it announced on Wednesday before the bell that Alimentation Couche-Tard Inc. (ATD-B-T) has agreed to make a strategic investment in the Edmonton-based cannabis retailer.
The companies say Couche-Tard’s initial investment would initially give it rights to 9.9 per cent of Fire & Flower’s equity, with the potential to increase its stake to 50.1 per cent in return for a total of about $380-million in growth capital.
“Fire & Flower has demonstrated that it is capable of rapidly scaling its retail platform through a best-of-class store concept, a leading digital platform and a focus on the safe, responsible and lawful sale of cannabis. This investment will provide Fire & Flower with additional funds to support the further development of its proprietary HifyreTM digital retail platform and expansion of its retail store network across Canada and internationally where legally permitted,” the company said.
Fire & Flower also announced that it has received conditional approval to post its common shares for trading on the Toronto Stock Exchange.
Shares of Couche-Tard sat 1 per cent higher on the news.
WestJet Airlines Ltd. (WJA-T) was up 0.1 per cent after its shareholders voted overwhelmingly in favour of a $3.5-billion takeover by Toronto-based Onex Corp. on Tuesday, ending 23 years as an independent airline.
WestJet said more than 92 per cent of votes cast by Tuesday were in support of the deal reached with the Toronto-based investment company.
The per-share price of $31 is a discount from the $35.75 Onex proposed in March, before taking a close look at the company’s books. Citing uncertainties that included the grounding of WestJet’s Boeing 737 Max aircraft, Onex slashed its offer before the two sides agreed on the $31 offer jointly announced on May 13.
The deal is expected to close later this year.
In reaction to the results, several equity analysts on the Street raised their ratings for its stock.
UBS’ Eric Sheridan said Snap’s progress “cannot be ignored” and raised his rating to “neutral” from “sell” while doubling his target price for its shares to US$16.
“We must acknowledge the turnaround in underlying operating trends,” he said.
The fast food chain operator reported same-store sales growth of 10 per cent, which was in-line with expectations. It also raised its monthly cash distribution by 3.3 per cent to 15.9 cents per unit.
In a research note, Laurentian Bank Securities analyst Elizabeth Johnston said: “We believe that strong menu innovation, notably the Beyond Meat burger, has continued to benefit SSSG. A&W launched the Beyond Meat burger in early Q3/18, and has now contributed for a full year of results. Additionally, a breakfast Beyond Meat sandwich was introduced in early March (i.e. late Q1/19) and this would likely have also contributed though to a lesser degree, given that the breakfast daypart represents a minority of overall sales (we believe in the 15-per-cent range). We will be looking for additional commentary on the conference call with respect to the contribution to SSSG from menu innovation and other key components such as customer traffic, average cheque and menu price increases.”
Beyond Meat Inc. (BYND-Q) rose 3.8 per cent after announcing a partnership with Dunkin’ Brands Corp. (DNKN-Q) that will see its Beyond Sausage Breakfast Sandwich available at its stores. It’s the first deal with a U.S. restaurant chain.
Dunkin’ shares were up 1.6 per cent.
On the decline
CannTrust Holdings Inc. (TRST-T) fell 21.9 per cent after The Globe and Mail reported both its chairman and the chief executive officer were informed that the company was growing cannabis in unlicensed rooms about seven months before Health Canada uncovered the regulatory breach.
Revenue rose 2.9 per cent to $11.13-billion in the quarter, partly due to higher food inflation in the country.
On an adjusted basis, the company earned $1.01 per share, which is in line with analysts’ estimates.
Shares of Transat A.T. Inc. (TRZ-T) was down 0.6 per cent a day after it said Air Canada (AC-T) is the “preferred buyer” of the airline and travel company and urged shareholders to vote in favour of its friendly takeover, worth $13 a share, or $520-million, on Aug. 23.
In a regulatory filing, the company pointed to assurances from Air Canada that Transat’s jobs and brand will be preserved, while noting the bid offers shareholders a “significant premium.”
Shares of Boeing Co. (BA-N) were down 3.2 per cent after it reported a nearly US$3-billion second-quarter loss on Wednesday as the world’s largest plane maker struggles with the prolonged grounding of its best-selling 737 Max jet.
The company has cut production of its flagship single-aisle aircraft and it booked a charge of nearly $5-billion in the quarter in the wake of the worldwide grounding following fatal crashes in Ethiopia and Indonesia.
The charge, disclosed by Boeing last week, includes compensation the plane maker will have to pay airlines for the delayed deliveries.
The company said it would issue a new 2019 outlook at a future date, as the current forecast, which was suspended in April following two deadly crashes involving the Max, does not reflect the recent charges.
Caterpillar Inc. (CAT-N) dropped 4.5 per cent after its quarterly results fell short of the Street’s expectations, weigh down by a combination of weak sales in China, and higher production and restructuring costs.
The heavy equipment maker retained its 2019 earnings outlook, but said the full-year earnings are expected to be at the lower end of its forecast.
The company said it has an agreement with a group of investment dealers, led by Canaccord Genuity Corp., to purchase 20.5 million units at $2.45 each. Each unit will be comprised of one common share of the company and one half of one common share purchase warrant. Each warrant will entitle the holder to acquire one common share of the company at a price of $3.50 per common share, subject to adjustment in certain events, for three years.
The company said it intends to apply to list the warrants on the Canadian Securities Exchange.
With files from Eric Atkins, Brenda Bouw, staff and wires