A roundup of some of the North American equities making moves in both directions today
On the rise
Bausch Health Companies Inc. (BHC-T) rose 1.9 per cent on Wednesday after announcing it is ending significant legal matters from the Valeant era by agreeing to pay $94-million plus administration costs to resolve a Canadian securities class action.
The action filed in Quebec Superior Court in 2015 alleged violations of Canadian securities laws over a stock plunge that hit investors about five years ago.
As part of the settlement, the company and the other defendants admit no liability and deny all allegations of wrongdoing.
The Quebec-based pharmaceutical company says the settlement resolves substantively the same matters as a U.S. securities class action that was settled last year for US$1.21-billion.
Bausch chairman and CEO Joseph Papa says the settlements and recent resolution of the legacy Securities and Exchange Commission investigations turn the page on legal problems and enables the company to focus on its current operations.
Thomson Reuters Corp. (TRI-T) erased early losses to close up 0.2 per cent after it reported higher-than-expected second quarter profit on Wednesday and reaffirmed its 2020 forecast in the face of global market uncertainty.
The news and information provider, which owns Reuters News, said sales in the company’s legal, tax and corporate businesses are expected to rise in the current quarter.
“Results in the second quarter illustrate the resilience in our business,” Chief Executive Steve Hasker, who joined Thomson Reuters this year, said in an interview.
The company was about two-thirds through a 2020 cost-cutting program, which is focused on external costs, such as consultants and travel and entertainment, and targets $100 million in savings, Chief Financial Officer Michael Eastwood added.
“We will achieve it on discretionary expenses,” Eastwood said.
Thomson Reuters said it has seen no significant disruptions from the coronavirus crisis, adding that its 500,000 legal, tax and other professional clients were able to access its services online, working from home.
Thomson Reuters said its quarterly revenue dipped 1 per cent to US$1.405-billion and operating profit fell 18 per cent to US$365-million, from US$447-million a year ago, when the quarter included some one-time items.
Adjusted earnings of 44 US cents per share were ahead of the 38 US cents analysts expected, according to Refinitiv, while the sales figure was in line with Wall Street expectations.
Thomson Reuters expects higher free cash flow for the year, of between US$1- and US$1.1-billion, and said its three main divisions should grow sales by 3-4 per cent in the third quarter.
Great-West Lifeco Inc. (GWO-T) increased 4.4 per cent after saying it is selling its Canadian subsidiary GLC Asset Management Group Ltd. to Mackenzie Financial Corp. for $175-million in cash.
As part of the deal, Great-West subsidiary The Canada Life Assurance Company will acquire fund management contracts relating to the private label Quadrus Group of Funds and other Canada Life branded investment funds from Mackenzie for $30-million in cash.
That will result in Lifeco receiving net cash of $145-million if the deal receives regulatory approval and closes as expected in the fourth quarter.
In the wake of the release of better-than-anticipated second-quarter financial results after the bell on Tuesday, shares of Gibson Energy Inc. (GEI-T) finished up 3.6 per cent.
The Calgary-based company reported headline earnings befre interest, taxes, depreciation and amortization (EBITDA) of $143-million, topping the consensus forecast on the Street of $98-million.
Canaccord Genuity analyst John Berznicki said: “We believe Gibson’s Q2/20 results reflect the inherent stability of its core Infrastructure segment while showcasing the ability of the Marketing segment to generate opportunistic cash flow even in a very challenging environment.”
It also announced a normal course issuer bid to cancel up to 2.5 million common shares, or 3.7 per cent of its outstanding shares as at July 31.
For the quarter, the Montreal-based producer and marketer of pressure-treated wood products reported sales and earnings per share of $768-million and $1.02, exceeding the Street’s projections of $668.6-million and 73 cents.
Calling the results “robust,” Desjardins Securities analyst Benoit Poirier said: “Overall, we are very pleased with the solid results for the quarter, which demonstrated the company’s strong resiliency in the midst of the COVID-19 pandemic. The positive guidance revision is also testament to that. The new NCIB program supports our bullish stance on the name. We recommend investors buy the shares.”
Walt Disney Co. (DIS-N) on Tuesday after the bell avoided the unmitigated disaster some investors feared as it eked out an adjusted profit amid the coronavirus pandemic that shut down parks, movie theaters and sporting events across the globe.
Disney’s quarterly profit of 8 US cents per share on an adjusted basis beat expectations for a loss of 64 US cents, sending the stock up 8.8 per cent.
The company took a nearly US$5-billion charge due to the pandemic and shifting media habits. COVID-19 wiped out US$3.5-billion in operating profit in the parks division.
“The majority of businesses worldwide have experienced unprecedented disruption as a result of the pandemic,” Disney Chief Executive Bob Chapek told analysts. “Most of our businesses were shut down, and this had a huge impact.”
Investors overlooked total revenue that fell short of expectations by nearly US$600-million and focused on divisions including parks and its media networks with revenue declines that were not as bad as expected.
The Disney+ streaming service, which had 60.5 million paying customers as of Monday, was a bright spot in the quarter, Chapek said. Disney had reported 54.5 million subscribers as of May 4.
Novavax Inc. (NVAX-Q) said late Tuesday its experimental COVID-19 vaccine produced high levels of antibodies against the novel coronavirus, according to initial data from a small, early-stage clinical trial, sending the company’s shares up 10.5 per cent.
The company said it could start a large pivotal Phase III trial as soon as late September, and on a conference call added that it could produce 1 billion to 2 billion doses of the vaccine in 2021.
Novavax research chief Gregory Glenn told Reuters the late-stage clinical trial could potentially glean enough data to obtain regulatory approvals as early as December.
Maryland-based Novavax said its vaccine candidate, NVX-CoV2373, produced higher levels of the antibodies in healthy volunteers after two doses than those found in recovered COVID-19 patients, raising hopes for its eventual success.
Johnson & Johnson (JNJ-N) sat up 0.8 per cent after the drugmaker said the United States government will pay over US$1-billion for 100 million doses of its investigational coronavirus vaccine.
It said it will deliver the vaccine to Biomedical Advanced Research and Development Authority (BARDA) on a not-for-profit basis to be used after approval or emergency use authorization by the U.S. Food and Drug Administration (FDA).
J&J’s investigational vaccine is currently being tested on healthy volunteers in the United States and Belgium in an early stage study.
The New York Times Co. (NYT-N) increased 1.4 per cent as it beat second-quarter revenue estimates on Wednesday as a jump in subscribers helped the company paper over a coronavirus-induced collapse in advertising spending.
The Times, which competes for ad dollars with big players like Facebook Inc and Alphabet Inc’s Google, has been shifting towards a subscriber-backed model in an effort to cut its reliance on advertising.
The media company that gets more than half of its revenue from subscriptions said it added 669,000 digital subscribers in the quarter.
Subscription revenue rose 8.4 per cent to US$293.19-million, helping the company tide over a 43.9-per-cent drop in advertising revenue.
The company’s total revenue fell 7.5 per cent to US$403.75-million, above analysts’ estimates of US$387.18-million, according to IBES data from Refinitiv.
Net income attributable to stockholders fell to US$23.66-million, or 14 US cents per share, in the quarter ended June 30 from US$25.17-million, or 15 US cents per share, a year earlier.
Hepion Pharmaceuticals Inc. (HEPA-Q), a New Jersey-based clinical stage biopharmaceutical company focus on the development of therapeutic drugs for the treatment of liver disease arising from non-alcoholic steatohepatitis (NASH), was up almost 8.9 per cent after announcing that its CRV431 treatment was administered to the first NASH patient.
SoftBank-backed BigCommerce Holdings Inc.’s (BIGC-Q) shares jumped nearly three-fold on their blockbuster debut on Nasdaq on Wednesday, as the IPO market surges ahead after the COVID-19 pandemic placed many debuts on hold earlier this year.
BigCommerce opened at US$68 a share, and at one point the stock jumped over four-fold to hit a session high of US$93.99.
BigCommerce, which powers e-commerce sites such as Skullcandy Inc, Sony Corp and Ben & Jerry’s, sold a little more than nine million shares at US$24.00 per share on Tuesday to raise US$216.5-million.
The Austin-based software firm, which counted SoftBank, General Catalyst, GGV Capital, Goldman Sachs and Samsung Ventures among its biggest backers, had initially aimed to sell shares at between $21.00 and $23.00 per share.
On the decline
Norbord Inc. (OSB-T) dipped 2.6 per cent after it beat expectations as it swung to an US$18-million profit in the second quarter despite a six-per-cent drop in revenues.
The Toronto-based forest products company says it earned 22 US cents per share, down from a loss of 17 US cents per share of US$14-million a year earlier.
Excluding one-time items including a US$16-million asset impairment related to idle production assets at the Grande Prairie, Alta., mill, Norbord earned US$31-million or 38 US cents per share, compared with a loss of US$8-million or 10 US cents per share in the prior year’s quarter.
It attributed the gains to higher realized North American oriented strand board prices and lower manufacturing costs, partially offset by lower shipment volumes.
Revenues for the three months ended June 30 were US$421-million, down from US$447-million in the second quarter of 2019.
Norbord was expected to post 8 US cents per share in adjusted profits on nearly US$398-million of revenues, according to financial data firm Refinitiv.
CVS Health Corp. (CVS-N) raised its full-year profit forecast and beat Wall Street expectations for quarterly profit on Wednesday, as a drop in non-urgent medical procedures due to the COVID-19 pandemic led to fewer claims at its health insurance business.
Hospitals also rescheduled elective surgeries to reduce the burden on the healthcare system as coronavirus cases surged, benefiting health insurers including CVS Health and Humana Inc , which also beat quarterly profit estimates on Wednesday, as claims fell.
Shares of CVS, which also operates drugstores, fell 0.8 per cent.
The medical benefit ratio - the percentage of premiums paid out for medical services - at CVS’ health insurance unit fell to 70.3 per cent from 84 per cent a year earlier. Sales at the unit rose 6.1 per cent to US$18.47-billion.
CVS like other health insurers including industry bellwether UnitedHealth has warned that costs may go up in the remainder of the year as Americans catch up on their postponed surgeries.
Activision Blizzard Inc. (ATVI-Q) lost 2.5 per cent after it raised its full-year forecast for adjusted sales after beating quarterly estimates on Tuesday, encouraged by a pandemic-driven surge in gaming and the next release in its blockbuster Call of Duty franchise later this year.
The company raised its 2020 adjusted revenue forecast to US$7.63-billion from US$6.9-billion, edging past analysts’ estimate of US$7.22-billion, according to IBES data from Refinitiv.
Videogame sales in the United States have largely benefited as people played more games while staying at home and bought virtual in-game content across platforms, pushing June sales up 26 per cent to US$1.2-billion, which is the highest June spend in over a decade according to research firm NPD.
Call of Duty: Modern Warfare was the second best-selling game in June across all platforms, according to NPD. Average Twitch viewership for the game shot up about 129 per cent in the second quarter, compared to the first quarter.
Stingray Group Inc. (RAY.A-T) was down 1.2 per cent after saying revenue in its fiscal first quarter ended June 30 fell by 35 per cent to $52.3-million as the impact of the COVID-19 pandemic hit revenue from radio operations.
It is reporting net income of $7.02-million, down 23.5 per cent from $9.18-million on revenue of $80.4-million in the same period of 2019.
The Montreal-based company, which provides an advertising-free music service, says it had $13.5-million or 18 cents per share in earnings adjusted to exclude one-time items, beating analyst expectations of 16 cents per share, according to financial data firm Refinitiv.
That compared with an adjusted profit of $16.7-million or 21 cents a year earlier.
Beyond Meat Inc.’s (BYND-Q) quarterly results showed on Tuesday that the plant-based burger maker spent more than expected on dealing with the fallout of weak demand from restaurants, sending shares down about 6.6 per cent.
El Segundo, California-based Beyond Meat typically gets about half its global sales from restaurants, many of which closed stores and limited menus during the quarter due to COVID-19. But as fast-food orders slumped, demand from grocery shoppers on lockdown surged and Beyond Meat had to spend nearly US$6-million to reroute products to retailers like Walmart and Costco.
“We had to figure out how to continue to grow in an environment where half our business, essentially, deteriorated,” Chief Executive Ethan Brown said.
Sales fell nearly 61 per cent at the company’s U.S. food service business, which supplies plant-based patties, chicken and sausages to fast-food chains like KFC and Dunkin Brands . Revenue from international restaurants more than halved to US$7.2-million.
Wynn Resorts Ltd. (WYNN-Q) was lower by 2.1 per cent after it posted a wider-than-expected loss for the second quarter, as the COVID-19 pandemic kept customers away from gaming tables and hurt the U.S. casino operator’s gambling revenue.
Hopes for a near-term recovery in Macau, the world’s biggest gambling hub, have dulled as a resurgence in coronavirus cases muddies the outlook for when China will reinstate travel visas.
A significant amount of the operator’s gaming revenues in Macau and Las Vegas come from customers from mainland China. Wynn’s Macau operations accounted for nearly 70 per cent of its revenue in 2019.
Gambling revenue in Macau plunged 94.5 per cent in July as casinos reeled from a lack of visitors in the casino hub despite a loosening of quarantine restrictions.
Revenue from Wynn’s main casino business plunged 99.2 per cent to US$9.4-million during the second quarter ended June 30. Total revenue plunged 94.8 per cent to US$85.7-million.
Shares of cloud services firm Rackspace Technology Inc. (RXT-Q) plunged on their Nasdaq debut on Wednesday, a blow for the cloud services firm’s private equity owners Apollo Global Management.
The stock closed at US$16.33, down from the US$21 per share price Rackspace shares had sold for in its initial public offering on Tuesday.
The lackluster IPO and trading debut bucked the recent trend of strong appetite from investors for cloud computing companies as the novel coronavirus pandemic drives more businesses to operate digitally and rely on cloud computing for more of their workflow.
Rackspace sold 33.5 million shares in its IPO at the bottom end of its target range of US$21 to US$24 per share, valuing the company at US$4.18-billion, excluding debt.
“We’ve actually been very pleased with how the IPO process has gone. This is one of the largest tech IPOs of the year so we’re pretty excited to reach this milestone,” Rackspace Chief Executive Kevin Jones said in an interview before the stock started trading.
“We’re not really focused on today’s stock price. We’re more focused on the long term and the future,” Jones added.
With files from staff and wires