A roundup of some of the North American equities making moves in both directions today
On the rise
Rogers Communications Inc. (RCI-B-T) rose 3.3 per cent on Wednesday despite missing the Street’s estimates for its fourth-quarter core earnings as more people continued to shift to its unlimited data plan, leading to a decrease in its revenues from charging customers for additional data usage.
Rogers, which started its 5G infrastructure roll-out last week, generated average revenue per user of $55.26 from its wireless services, compared with $55.91, a year earlier.
The company’s net income fell to $468-million or 92 cents per share in the quarter ended Dec. 31, 2019 from $502-million, or 97 cents per share, a year earlier.
On an adjusted basis, it earned $1 per share, missing analysts’ average estimate of $1.02, according to IBES data from Refinitiv.
Shares of BCE and Telus were both up over 0.6 per cent.
The Toronto-based firm reported adjusted earnings per share of 24 cents, rising from 18 cents during the same period a year ago and ahead of the consensus projection on the Street of 16 cents per share.
Tesla Inc. (TSLA-Q) was up 4.3 per cent after it became the first US$100-billion publicly listed U.S. carmaker in extended trading on Tuesday, in a sign of Wall Street’s confidence in an all-electric future.
The milestone comes less than a month after Tesla’s stock crossed US$420, the infamous price at which Chief Executive Officer Elon Musk had tweeted he would take the electric car maker private.
Musk tweeted he had “funding secured” to take Tesla private in August 2018, when its shares were trading in the mid-$330s, only to later give up under investor pressure and regulatory concerns.
Tesla’s market value also puts Musk a step closer to earning the first US$346-million tranche of options in a record-breaking pay package.
The US$100-billion valuation needs to stay for both a one-month and six-month average in order to trigger the vesting of the first of 12 tranches of options granted to Musk to buy Tesla stock.
Tesla, which is already valued more than Ford Motor Co and General Motors Co combined, has seen its stock more than double in the last three months, fueled by a rare quarterly profit in October, news of production ramp-up in its China factory and better-than-expected annual car deliveries.
Abbott Laboratories Inc. (ABT-N) was up 2.4 per cent after it reported a 60-per-cent rise in fourth-quarter profit on Wednesday, boosted by strong sales of its diabetes and heart devices.
The company’s net earnings rose to US$1.05-billion, or 59 US cents per share, in the quarter ended Dec. 31, from US$654-million, or 37 US cents per share, a year earlier.
Net sales of the medical device maker rose 7 per cent to US$8.31-billion.
International Business Machines Corp. (IBM-N) jumped 3.4 per cent in reaction to it forecasting full-year profit above market expectations on Tuesday after reporting surprise growth in quarterly revenue, boosted by its high-margin cloud computing business.
Revenue from the cloud business rose 21 per cent to US$6.8-billion in the fourth quarter, its largest so far.
The company forecast an adjusted profit of at least US$13.35 per share for the year, compared with estimate of US$13.29.
In a research note, Citi analyst Jim Suva said: Tuesday night IBM reported Q4 results and gave its 2020 outlook which in general had better than expected EPS and will rightfully beg the question: ‘Is IBM turning the corner?’ However we note the stronger EPS was helped by a lower tax rate for 2020 of 7-9 per cent which is more favorable than expectations of a tax rate of 11 per cent. With better than expected outlook coupled with a 4.5-per-cent dividend yield investors will rightfully be asking this question. We acknowledge IBM trends are improving and we look to see if the company can improve its signings to show positive growth which on a rolling four quarter basis continues to be negative
On the decline
Netflix Inc. (NFLX-Q) lost 3.6 per cent after it missed Wall Street subscriber forecasts for the first quarter Tuesday, amid pressure from lower-cost services from Walt Disney Co and Apple Inc in the streaming video wars.
The streaming giant added more paying subscribers than Wall Street expected in the fourth quarter, beating international subscriber estimates but missing estimates for U.S. subscriber growth.
The company acknowledged that competitive pressure and a recent price hike impacted its U.S. business, where subscriber growth fell short of analyst estimates.
Competition had a more muted impact on its viewership in Canada, Australia and the Netherlands, the company wrote in a letter to investors.
Credit Suisse analyst Douglas Mitchelson said: “Bears will note that the U.S. net adds for 4Q19 not only came in a bit short (423k net adds vs. 600k guide), but were well below the 1.529 million net adds in 4Q18, with mgmt blaming the U.S. decline in part on competition with Disney+ (and equally due to lingering price increase churn). However, mgmt noted Disney+ has no noticeable impact on overseas subscriber trends in the markets where it launched, suggesting that the U.S. will not be the proverbial canary in the coalmine regarding the impact of competition for Netflix overseas. Further, 4Q19 was likely the toughest competitive launch Netflix will face by far, and the U.S. miss was small relative to Disney+ skyrocketing to a well-ahead-of-expected 20 million subs (Credit Suisse estimate) right out of the gates. Overall, while we do not expect a strong follow-through for NFLX shares on the 4Q/1Q results, we believe the set-up is now quite favorable for Netflix heading into 2020 – the 1Q20 guide of 7 million net adds looks conservative to us, followed by a 2Q with very easy comparisons against elevated price increase churn from 2Q19 and a strong content line-up per management, while we do not see any other streaming service launches packing the same punch that Disney+ did in 4Q19.”
Johnson & Johnson (JNJ-N) slid 0.7 per cent on Wednesday forecast full-year profit largely below expectations, after posting a rare miss on quarterly revenue as sales of some of its major drugs fell short of Wall Street expectations.
J&J’s pharmaceuticals unit, which makes up half of the overall sales and produces blockbuster drugs such as Imbruvica and Stelara, has powered much of the company’s recent growth even as it works to improve the performance of its medical device and consumer health units.
However, intense competition for some off-patent drugs such as prostate cancer drug Zytiga, coupled with pressure on prescription drug prices in the United States, has weighed on revenue at the top-earning unit.
United Airlines Holdings Inc. (UAL-Q) was 2.9 per cent lower after it beat Wall Street estimates for quarterly profit and held to its 2020 profit target, with a turnaround strategy overseen by its outgoing CEO underpinning growth even as the Boeing 737 MAX remains grounded.
While United has warned of a hit from the MAX grounding, it did not disclose any estimated financial impact from the fallout and stood by its full-year adjusted EPS range of US$11 to US$13.
Total operating revenue rose 3.8 per cent to US$10.89-billion, boosted by strong travel demand and Chief Executive Oscar Munoz’s three-year strategy to build up the airline’s flight connections through its main U.S. hubs. United President Scott Kirby will succeed Munoz as CEO later this year.
Revenue per mile flown, a closely watched industry measurement, rose 0.8 per cent in the fourth quarter and United forecast similar growth in the first quarter given solid bookings.
In a research note released Wednesday, Citi analyst Stephen Trent said: “While United’s full-year EPS guidance looks conservative, it also seems too early to rush to conclusions on the potential impact of coronavirus issues in China. United appears to have the most trans-Pacific exposure among the US majors.”
Boeing Co. (BA-N) shares continued to slid, sitting down 1.4 per cent a day after the U.S. planemaker warned of further delay in returning its once best-selling jet to service.
Analysts estimated Wednesday Boeing’s bill for the 737 MAX grounding could balloon to more than US$25-billion, analysts estimated on Wednesday,
The company has already booked US$9-billion in costs related to the grounding, including US$5.6-billion as compensation for airline customers and US$3.6-billion in charges to cover additional production costs.
Jefferies analyst Sheila Kahyaoglu said Boeing may now need to boost its compensation package for customers by another US$10-billion and revise its cost estimate related to the 737 MAX’s production by an additional US$5.4-billion.
“Our estimates assume 737 MAX deliveries restart in Q3 2020,” Kahyaoglu said, lowering the brokerage’s price target on the stock to US$390 from US $420.
Boeing said on Tuesday it did not expect to win approval for the return of the 737 MAX to service until mid-year due to further potential developments in the certification process and regulatory scrutiny on its flight control system.
Credit Suisse analyst Robert Spingarn said: “We acknowledge that there could at some point be a tactical trading opportunity on Boeing as recertification greenlight gets closer — a major derisking event. However, we continue to hold that we have no edge in predicting the timing of that event, while at the same time we see numerous risks that impact the long-term investment thesis and therefore our ability to become constructive. The most important of these include the competiveness of BCA’s product portfolio vis-à-vis Airbus — a position of weakness that if not resolved impairs the long-term investment story, and if it is resolved impairs the short-medium term investment story (entering a cash heavy investment cycle). This, layered in with broader cultural issues at the company, execution missteps at BDS, 777X EIS risk, and other items keep us firmly on the sidelines.”
With files from wires and staff