A roundup of some of the North American equities making moves in both directions today
On the rise
The Toronto-based company reported income of $105-million, dipping from $110.9-million during the same period a year ago but above the consensus estimate on the Street of $101.3-million. Total assets under management increased 5 per cent year-over-year to $38.8-billion.
Desjardins Securities analyst Gary Ho said: “Adjusted EPS was above our estimate and consensus, and WM EBITDA was also ahead of our expectations. In addition, SG&A expense is on track to hit management’s 4-per-cent reduction target. However, the company took a $14.4-million restructuring charge (which we view as one-time), and retail fund performance continues to trend below management’s target.”
Southwest Airlines Co. (LUV-N) rose 2.2 per cent after it cut its financial outlook in the wake of the recent groundings of the 737 MAX planes.
Dallas-based Southwest, the largest operator of the Boeing aircraft, lowered its operating revenue per available seat mile, a key measure of airline performance, to an increase of 2 per cent to 3 per cent, down from its previous guidance of 3 per cent to 4 per cent.
It estimates about 9,400 flights will be canceled through March 31, and said it now expects capacity growth to be about 1 per cent, compared with its previous growth forecast of 3.5 per cent to 4 per cent.
On Tuesday, a passenger-less Southwest Boeing 737 MAX 8 aircraft landed safely after declaring an emergency over an engine-related problem leaving Orlando International Airport.
Citi analyst Kevin Crissey said: “We expected near-term consensus estimates to come down sharply (they are now, in our view) as the sell-side had been slow and underappreciating the financial impact of the Q1 challenges faced by the company. However, investors so far are willing to look past these issues. We are a little surprised as some of the challenges will linger (softer demand/MAX impact). We still think shares could underperform near-term.”
Boeing Co. (BA-N) wad up 0.9 per cent after confirming Wednesday it will make a safety feature standard on its now-grounded 737 MAX that might have warned earlier of problems that possibly played a role in two recent crashes.
The company said in a statement will make the “Angle of Attack disagree” alert a standard feature on the 737 MAX and added it can be retrofitted on existing airplanes.
Despite falling short of Wall Street’s expectations with its first-quarter results, shares of Lennar Corp. (LEN-N), the No. 2 homebuilder in the U.S., jumped 3.9 per cent after it expressed optimism amid moderating home prices.
“We continued to see choppiness in the marketplace during our first quarter, consistent with what we highlighted on our fourth quarter conference call,” said executive chairman Stuart Miller. “However, during the quarter, mortgage interest rates subsided and ultimately pulled back and home prices moderated providing a catalyst for the new home market to correct itself. Accordingly, sequentially throughout the first quarter, we saw increased interest in new home purchases as part of an improving and stabilizing housing market. We continue to believe that the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remain favorable.”
Enbridge Inc. (ENB-T) rose 0.3 per cent on Wednesday after Minnesota’s Public Utilities Commission granted a final green light to its proposed Line 3 crude oil pipeline replacement. The regulator unanimously rejected the final pending petitions for reconsideration, including one from the state’s Commerce Department.
“It’s better to replace a more than 50-year-old pipe with one that is safer. For the Department (of Commerce) to argue that the Commission should ignore the current condition of the very infrastructure that is to be replaced is nonsensical,” said PUC Commissioner Katie Sieben.
On the decline
“As we believe CRON’s valuation was somewhat stretched at Altria’s investment price of $16.25, we are lowering our recommendation primarily on valuation,” said Canaccord Genuity’s Matt Bottomley. “However, in addition to its valuation, Cronos also reported Q4/18 financial results that we believe were fairly light in a period that represented the company’s first full quarter of recreational sales in Canada.”
“Under the terms of the partnership, Houseplant will lean on the production and distribution capabilities of Canopy Growth and its licensed subsidiaries to ensure an ample supply of Houseplant flower, Softgel, and pre-rolled formats are rolled out in Canada over the coming months,” said Canopy in a release. “Through a minority ownership in the new business venture, Canopy Growth will help Houseplant scale quickly and support Houseplant’s long-term success.”
“Canopy Growth has worked closely with Houseplant for almost two years and the entire Canopy Growth team is deeply impressed by their understanding of the cannabis consumer, attention to detail, and hands-on approach to this new partnership.”
“The Gosselin Zone is a new grass-roots discovery, the result of our ongoing commitment to sustained exploration and an excellent group effort by the Côté Exploration team,” said Craig MacDougall, Senior Vice President, Exploration. “With the completion of a positive feasibility study for the Côté Gold deposit in 2018, demonstrating a solid development opportunity with a long mine life and low production costs, this exploration success continues to add to our track record of resource expansion and further enhances the long term value of this exciting development project.
In a research note released Wednesday, RBC Dominion Securities analyst Sabahat Khan said: “On the near-term, we do expect some disruption in the distributor channel during the liquidation as other distributors potentially take a more cautious view on their inventories/replenishment. Given the ‘non-recurring’ nature of this charge, we are not necessarily concerned about the earnings impact in the quarter, but rather the potential for near-term disruption in the distributor channel."
The Stars Group Inc. (TSGI-T) was down 4.6 per cent after announcing it expects annual adjusted diluted net earnings per share growth of at least 10 per cent and constant currency revenue growth of 8-12 per cent over the next 3-5 years. It announced the targets in conjunction with its annual Investor Day event in New York.
“The Stars Group is now a diversified global market leader with what we believe to be leading product offerings and an expansive geographic reach. Building on this strong foundation, we are introducing medium-term growth targets as we continue to progress with our vision to be the world’s favorite iGaming destination," said chief executive officer Rafi Ashkenazi.
The company said it has definitive agreements with an institutional investor, and certain directors and officers of the company, including chairman and chief owner Rob McEwen, who have agreed to purchase units of the company in the offering.
Each unit is priced at $1.55 and consists of a share of common stock and one-half of a warrant to purchase common stock.
“I am pleased to say that this financing provides us with the flexibility we need to take advantage of additional opportunities at our operations,” said Mr. McEwen.
Sleep Country Canada Holdings Inc. (ZZZ-T) dipped 2.7 per cent announcing the resignation of chief financial officer Robert Masson will resign “to pursue another opportunity,” as of May 7.
Laurentian Bank Securities analyst Elizabeth Johnston called the departure “slightly negative,” adding: “Mr. Masson has been with Sleep Country since 2013 and helped lead the company through its IPO in 2015; we believe that the departure is on good terms. However, with no interim CFO appointed we believe that the company will need to quickly fill this position else appoint someone internally on an interim basis. We would anticipate that the new CFO would have experience in the retail industry, and potentially additional experience with e-commerce.”
With files from staff and wires