A roundup of some of the North American equities making moves in both directions today
On the rise
Maple Leaf Foods Inc. (MFI-T) rose almost 1 per cent after it voluntarily suspended exports of pork to China following an outbreak of COVID-19 in a Manitoba plant.
The company said late Tuesday that it was proactively complying with new Chinese government protocols for Canadian processors that require that any plant reporting a positive COVID-19 case suspend exports to China temporarily.
“We respect China’s new import protocols for Canadian products and are working cooperatively with Canadian and Chinese authorities to resume exports quickly,” Maple Leaf chief executive Michael McCain said in a statement.
BlackBerry Ltd. (BB-T) rose 0.2 per cent on Wednesday amid news it is teaming up with a Texas-based startup to launch a new 5G-enabled version of its well-known smartphone in the first half of 2021, aimed at the North American and European markets.
The Canadian smartphone pioneer has been out of the hardware business for several years but licensed the BlackBerry name to other partners.
BlackBerry’s new partner is OnwardMobility of Austin, Texas, which will outsource manufacturing to subsidiary of Foxconn — a Taiwan-based company best known as the primary manufacturer of Apple’s iPhones.
OnwardMobility chief executive Peter Franklin says as much of the new BlackBerry as possible will be made in North America.
Target Corp. (TGT-N) on Wednesday reported its best quarterly comparable sales growth and online revenue that nearly tripled as shoppers lapped up videogames, kitchenware and clothes during the pandemic using the retailer’s same-day delivery services.
Shares of the Minneapolis-based retailer surge 12.6 per cent after it handily trounced estimates for quarterly profit and revenue.
The surging demand seen at big-box chains at the height of the lockdown, has continued into the second quarter even as restrictions ease, with U.S. shoppers using their stimulus checks to shop for non-essentials, such as tablets and beauty products.
“The biggest change we saw from Q1 to Q2 ... was the exceptional growth we saw in in-store shopping in an environment where many Americans were turning to digital to fulfill their needs,” Chief Executive Officer Brian Cornell told reporters.
Mr. Cornell added that even as the effect of government support has waned, sales remained strong in June and July with August off to a “solid start,” recording low double-digit growth.
In the second quarter ended Aug. 1, Target’s apparel sales grew by double-digits after a 20-per-cent first-quarter drop, with electronics sales up more than 70 per cent.
Through the pandemic-ridden first half of the year, that saw numerous bankruptcies of traditional brick-and-mortar retailers including J.C. Penney and Neiman Marcus, Target said it grabbed about US$5-billion in market share across categories.
The retailer also echoed bigger rival Walmart in describing the start to the back-to-school season as slow because of uncertainty around when students would go back to classrooms.
“As we move into Q4 we can expect a hard fought election and a holiday season that like so much of this year, is likely to be unprecedented,” Cornell said.
Target’s net earnings jumped 80.3 per cent to US$1.69 billion. with adjusted earnings per share of US$3.38 per share, well ahead of analysts’ US$1.62 per share forecast.
Lowe’s Cos Inc. (LOW-N) rose 0.3 per cent in the wake of blowing past analysts’ estimates for quarterly sales and profit on Wednesday as it benefited from a surge in demand for home improvement products from consumers stuck indoors due to the COVID-19 pandemic.
The company also posted a 34.2-per-cent rise in quarterly same-store sales, beating analysts’ estimates of a 13.2-per-cent increase, and said the momentum was carrying into August.
With a large base of do-it-yourself customers, Lowe’s has been among the chief beneficiaries of people undertaking minor home repair, painting or gardening work during the crisis.
That helped the company’s same-store sales far outpace the 23.4-per-cent rise recorded by larger rival Home Depot Inc, which relies more on demand from handymen, carpenters and professional contractors, whose businesses have only recently started to pick up.
Wedbush Securities analysts estimate that nearly 75 per cent of Lowe’s sales come from DIY customers, compared with about 55 per cent for Home Depot.
“Lowe’s Q2 is one for the record books,” Well Fargo analysts wrote, adding that while DIY demand could slow in coming quarters, Lowe’s would still see the benefits of more people moving out to suburban areas - closer to where a majority of its stores are located.
U.S. carrier Southwest Airlines Co. (LUV-N) was up 0.4 per cent in the wake of saying on Wednesday it expects cash burn in the third quarter to slow as bookings improve in August from a pandemic-driven grounding of flights worldwide, but flagged inconsistent demand and booking trends.
Southwest, which has decided to not participate in the government’s secured loan program, said it has taken actions to bolster its liquidity and, if required, it could secure additional financing at favorable terms.
The company said it now expects current-quarter cash burn to be about US$20-million per day, compared with its prior estimate of about US$23-million per day.
It now expects August 2020 operating revenue to fall between 70 per cent and 75 per cent from a year earlier compared with its earlier estimate of a decline of 70 per cent to 80 per cent.
The company also said its third-quarter capacity would likely slump between 30 per cent and 35 per cent, compared with its prior expectation of a 20- to 30-per-cent drop.
Oracle Corp. (ORCL-N) increased 1.8 per cent after U.S. President Donald Trump said on Tuesday that it is a good company and could take over popular Chinese-owned social media app TikTok in the United States, after he issued an order mandating its sale in 90 days.
The remarks came after Oracle joined some of the investors of TikTok’s Chinese owner, ByteDance, in pursuing a bid for the short-video app’s operations in North America, Australia and New Zealand, Reuters reported.
Johnson & Johnson (JNJ-N) was up 0.2 per cent after it said on Wednesday it would buy Momenta Pharmaceuticals Inc. (MNTA-Q) for about US$6.5-billion in cash to bolster its portfolio of treatments for autoimmune diseases.
Momenta shares were up 69.1 per cent at US$52.11, just shy of the offer price of $52.20.
The deal gives Johnson & Johnson’s Janssen unit access to Momenta’s experimental therapy, nipocalimab, being tested for myasthenia gravis, a neuromuscular disease that causes weakness in muscles.
“Nipocalimab gives Janssen the opportunity to reach significantly more patients by pursuing indications across many autoimmune diseases,” Johnson & Johnson said in a statement.
The drug is being developed to treat diseases where the body’s own antibodies attack or damage proteins and cells.
J&J reiterated its 2020 adjusted earnings per share forecast and said it expected the deal to close in the second half of 2020.
On the decline
President Ibrahim Boubacar Keita resigned on Tuesday and dissolved parliament hours after soldiers detained him at gunpoint and seized power in a coup.
B2Gold said its Fekola mine had sufficient supplies to maintain activities through the end of the third quarter “and beyond if needed.”
General Motors Co. (GM-N) slid 2 per cent after saying it is planning an electric car offensive in China with more than 40 per cent of its new launches in the country over the next five years set to be electric vehicles (EVs).
GM’s electric vehicles, many of which will be all-electric battery cars, will be manufactured in China with almost all parts coming from local suppliers, the company said in a statement released at its Tech Day event in Shanghai.
Reuters reported earlier on Wednesday that GM was planning to overhaul its Chinese line-up to stem a slide of sales after more than two decades of growth in a country that contributes nearly a fifth of its profit.
GM’s new China boss Julian Blissett told Reuters that new technologies, such as EVs and cars with near hands-free driving for highways, would play a key role in GM’s China initiatives, which are part of a push to get annual sales in the country back to the 4 million peak it hit in 2017.
GM did not say in its statement how many new or significantly redesigned models it was planning to launch in China over the next five years.
“China will play a crucial role in making our vision a reality,” GM CEO Mary Barra said in the statement, referring to its initiative to create what it describes as a future of “zero crashes, zero emissions and zero congestion” through electrification and smart-driving technologies.
Off-price retailer TJX Cos Inc. (TJX-N) lost 5.3 per cent after it posted a bigger-than-expected quarterly loss, as its stores were shuttered for nearly one-thirds of the quarter due to the lockdown.
TJX reported a net loss of US$214.2-million, or 18 US cents per share in the second quarter ended Aug. 1, from a profit of about US$759-million, or 62 US cents per share last year.
Excluding certain items, the retailer lost 18 US cents per share, compared with Wall Street expectations of 10 US cents per share, according to IBES data from Refinitiv.
TJX, a go-to for deal-seeking shoppers, also cut working hours and limited the numbers of customers at its stores at a point when other retailers have been doubling-down on promotions.
The company also projected that same-store sales at reopened stores will drop 10-20 per cent in the third quarter, as traffic and demand have moderated after an initial surge following reopening of its stores.
Shares of Gilead Sciences Inc. (GILD-Q) fell 4.8 per cent after the U.S. Food and Drug Administration declined to approve its experimental rheumatoid arthritis treatment, a major setback for one of the drugmaker’s important products.
Gilead’s antiviral medicine remdesivir has put the company at the forefront of the fight against the COVID-19 pandemic, sending its shares soaring, but analysts said the FDA move could cost it millions in delayed sales while it fights to get the drug approved.
Last year, Gilead invested US$5.1-billion in a major expansion of its partnership with Belgo-Dutch biotech Galapagos NV , banking on the potential of filgotinib and other drugs in development.
Goodyear Tire & Rubber Co. (GT-Q) slipped 2.5 per cent after U.S. President Donald Trump on Wednesday called for a boycott of the company in response to its policy that has deemed political attire, including that of the Trump campaign, unacceptable for the workplace.
Don’t buy GOODYEAR TIRES - They announced a BAN ON MAGA HATS. Get better tires for far less! (This is what the Radical Left Democrats do. Two can play the same game, and we have to start playing it now!).— Donald J. Trump (@realDonaldTrump) August 19, 2020
“To be clear on our longstanding corporate policy, Goodyear has zero tolerance for any form of harassment or discrimination,” a statement posted on the company’s official Twitter account said.
To enforce that policy, Goodyear said, it asks employees to refrain from “workplace expressions in support of political campaigning for any candidate or political party as well as similar forms of advocacy that fall outside the scope of racial justice and equality issues.”
With files from staff and wires