A roundup of some of the North American equities making moves in both directions today
On the rise
Retailer Aritzia Inc. (ATZ-T) rose 16 per cent on Wednesday after reporting a 19-per-cent increase in profit in the latest quarter after the bell on Tuesday, helped by growing online sales and a higher store count.
The Vancouver-based retailer reported net income of $17.9-million in the second quarter, compared with $15.1-million for the same quarter a year earlier. The company said adjusted earnings per share rose 12.5 per cent to 18 cents. Analysts had been expecting earnings by that measure of 13 cents a share.
On Wednesday, an equity analyst at TD Securities raised his rating for its stock.
WeedMD Inc. (WMD-X) finished flat after it announced it has secured a Health Canada licence amendment approval for its purpose-built processing facility in Strathroy, Ont.
The stand-alone, 50,000 square foot custom-built structure, located on its 158-acre Strathroy property, will dry, process and cure all remaining outdoor-cultivated cannabis in 2019 and is built to process and store more than 40 tons of dried cannabis biomass.
Bank of America Corp. (BAC-N) rose 1.5 per cent after beating Wall Street estimates for quarterly profit as it earned more in advisory fees and grew its loan book, easing concerns that lower interest rates would crimp growth at the second-largest U.S. bank.
Consumer banking - its biggest business - showed strength in the face of uncertainties in global financial markets and reinforced optimism about the financial health of individuals.
“In a moderately growing economy, we focused on driving those things that are controllable,” Chief Executive Brian Moynihan said in a statement.
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United Airlines Holdings Inc. (UAL-Q) was 2.1 per cent higher after it topped Wall Street estimates for quarterly profit, boosted by higher fares and lower fuel costs, and lifted its 2019 profit target despite the continued grounding of the Boeing 737 Max.
Chicago-based United is one of three U.S. airlines that have each had to cancel more than 2,000 monthly flights through the end of the year as Boeing Co’s 737 Max remains grounded following two deadly crashes in Indonesia and Ethiopia.
The flight cancellations have weighed on airline profits and costs, but strong travel demand, despite concerns of a global economic slowdown, continued to offset Max headwinds and disruption in Hong Kong and China.
As a result, United raised its 2019 adjusted diluted earnings per share guidance to US$11.25-US$12.25 versus US$10.50-US$12.00 previously.
On the decline
SIR Royalty Income Fund (SRV.UN-T) plummeted 21 per cent after it announced the reduction of its monthly cash distributions to unitholders by 1.75 cents “due to the recent and ongoing decline in SIR Corp.'s food and beverage sales.”
The fund’s monthly cash distributions will be reduced from 10.5 cents per unit to 8.75 cents per unit, effective the November distribution.
Laurentian Bank Securities analyst Elizabeth Johnston said: “The sequential decline in SSSG along with the commentary of a weak Q1F20 for the Corp. suggests that the Fund’s Q3/19 SSSG is likely to be negative. We view this reduction as indicative not only that near term SSSG will decline, but that the next several quarters are also likely to be under pressure.”
A&W Revenue Royalties Income Fund (AW.UN-T) dipped 2.5 per cent after it reported same-store sales growth of 1.2 per cent for the third quarter, which fell short of expectations on the Street.
Gross sales came in at $370.4-million, rising from $350.2-million a year earlier. Royalty income was $11.1-million up from $10.5-million. Net income was $8.6-million, up from $8.4-million a year ago.
Laurentian Bank Securities analyst Elizabeth Johnston said: “Strong menu innovation (specifically, the Beyond Meat burger) has recently been a strong tailwind for SSSG, and our lower SSSG forecast reflected our expectation that this tailwind would wane (as it had now contributed for a full year of results).”
“While the units have sold off in recent weeks, AW.UN continues to trade at a premium to the other restaurants in our coverage universe, which we believe is reflective of the expectation for continued strong SSSG.”
U.S. chip maker Broadcom Ltd. (AVGO-Q) slid 0.7 per cent after being ordered to halt exclusivity deals with six TV and modem makers for up to three years while EU antitrust enforcers investigate whether these agreements are aimed at thwarting rivals.
The move by European Competition Commissioner Margrethe Vestager suggests she may be more willing to take temporary but rapid action against tech giants deemed to be abusing their dominance rather than wait for investigations to be finalized.
Cannabis company Hexo Corp. (HEXO-T) was down 3.6 per cent after The Canadian Press reported it is moving to undercut prices in the illicit market with a new 28-gram product that costs consumers as much as one dollar less per gram than at the average illegal dispensary.
The product, under the brand Original Stash, which will be on sale in Quebec cannabis stores starting Thursday for $125.70, or $4.49 per gram, including taxes, the company said. That’s cheaper than the average cost of a gram of cannabis at $7.37 per gram during the third quarter, with the price of legal and illegal weed at $10.23 and $5.59 per gram, respectively, according to the latest Statistics Canada analysis of crowdsourced data.
Valens Groworks Corp. (VGW-X) lost 2.4 per cent on the back of the release of better-than-anticipated quarterly results after the bell.
AltaCorp Capital analyst David Kideckel said: “We view Valens’ performance over Q3/19 to be extremely positive, as the Company reported record revenue, adjusted EBITDA, and profitability.”
“We believe Valens is in a strong position to benefit from the expected growth in the cannabis market after the launch of derivatives later this year. Based on the Company’s leading position in the extraction (tolling) segment and ability to execute its white label strategy, we reiterate our investment thesis on Valens.”
Eli Lilly and Co. (LLY-N) fell 1.6 per cent after the drugmaker said on Wednesday its experimental pancreatic cancer treatment in combination with chemotherapy drugs failed to meet the main goal of overall survival in a late-stage study.
The trial evaluated Lilly’s pegilodecakin plus Folfox, which is a combination of chemotherapy drugs, compared to Folfox alone in patients with metastatic pancreatic cancer.
With files from Terry Weber and wires
David Leeder