A roundup of some of the North American equities making moves in both directions today
On the rise
Bombardier Inc. (BBD.B-T) was up over 6 per cent after resuming trading following the announcement that French transport infrastructure company Alstom has lowered its offer price to acquire the Canadian company’s rail business by $350-million.
Under the revised terms, Alstom will acquire Bombardier Transportation for an enterprise value of $8.4-billion.
Cominar Real Estate Investment Trust (CUF.UN-T) jumped 4.6 per cent after it announced its board has initiated a formal strategic review process “to identify, review and evaluate a broad range of potential strategic alternatives available to it with a view to continuing to enhance unitholder value.”
It said the strategic review process will be overseen by a special committee of independent trustees of the board. The REIT also said there’s no definitive timeline to complete the strategic review process “and no decisions have been reached at this time.”
In a research note, Desjardins Securities analyst Michael Markidis said: “It will likely take months for this process to play out. We also see several potential impediments to an en bloc transaction, including CUF’s geographic concentration and retail exposure. In the event that this announcement drives a positive near-term reaction in the stock price, we believe it may ultimately be short-lived.”
U.S. delivery firm FedEx Corp. (FDX-N) increased 5.8 per cent as it reported a bigger-than-expected quarterly profit on Tuesday, after price hikes, lower fuel costs and efficiency gains countered negative impacts associated with a pandemic-fueled surge in e-commerce shipments.
Average daily package volume for FedEx Ground, which handles e-commerce deliveries for retailers like Walmart, jumped 31 per cent to 11.6 million during the fiscal first quarter ended Aug. 31. Revenue per package rose 2 per cent to US$9.33 during the quarter, which also included one additional business day.
COVID-19 upended operations at FedEx and rival United Parcel Service. Lucrative deliveries to businesses dried up and higher-cost residential deliveries boomed as workers sheltered at home and placed online orders for everything from office furniture and exercise equipment to snacks and pet food.
Home deliveries traditionally have been more expensive because they involved fewer packages and far-flung stops. Rising volumes and investments in things like automated sorting centers and route optimization are bringing those costs down.
“Minor improvements can make a big difference whenever you’re moving this many packages a day. The worst of the pressures on profitability are probably behind the company,” Edward Jones analyst Matt Arnold said.
General Motors Co. (GM-N) rose 0.7 per cent as it prepares to announce plans on Wednesday to put into production an interchangeable “family” of electric vehicle (EV) drive systems and motors, boosting manufacturing efficiencies as it transitions to a fully electric lineup.
The move, which follows earlier GM initiatives on next-generation batteries, comes as the Detroit automaker looks to build a vertically integrated electric car business, comparable to Tesla Inc. (TSLA-Q), inside its ongoing operations.
According to a GM media release viewed by Reuters, the automaker is set to announce that it has designed and plans to produce on its own five interchangeable drive units and three motors, which it calls the “Ultium Drive” system.
GM said its new electric drive systems, sometimes referred to as e-axles in the industry, will have a versatile enough power output to allow them to be used with vehicles ranging from beefy pickup trucks to performance vehicles.
Tesla shares were down 1.8 per cent.
Eli Lilly & Co. (LLY-N) rose 0.6 per cent in the wake of saying on Wednesday that its experimental antibody reduced the need for hospitalization and emergency room visits for patients with moderate COVID-19, according to an interim analysis of a mid-stage clinical trial.
The study tested three different doses of LY-CoV555, a manufactured antibody designed to recognize and lock onto the novel coronavirus, preventing the infection from spreading.
Of the total 302 patients treated with three different doses of LY-CoV555, five of them, or 1.7 per cent, had to be admitted to a hospital or visit a hospital emergency room. That compares with a rate of 6 per cent, or 9 out of 150, for trial patients given a placebo, the company said.
Shares of McDonald’s Corp. (MCD-N) touched a record high and were up about 1 per cent after saying it is running short of ingredients to assemble its signature Quarter Pounder burgers at some of its restaurants, just days after the fast-food chain launched a promotional campaign with rapper Travis Scott.
Due to a surge in demand for Quarter Pounder burgers, the company has had to control the supply of beef, bacon, slivered onions and shredded lettuce to ensure that restaurants across the United States have enough supply.
“We’re working closely with our suppliers, distributors and franchisees to resupply impacted restaurants as quickly as possible,” McDonald’s USA said in a statement on Wednesday.
The limited time promotion called the “Travis Scott meal,” launched last week, includes existing McDonald’s menu items such as the Quarter Pounder with cheese and bacon, fries with barbecue sauce and a Sprite.
Southwest Airlines Co. (LUV-N) gained 3.7 per cent after it said on Wednesday it now expects cash burn to slow to US$17-million per day in the third quarter, adding that bookings had picked up in August and so far in September after struggling in July.
The U.S. airline had previously estimated daily cash burn of US$20-million for the current quarter.
The airline maintained its capacity cut outlook of between 30 per cent and 35 per cent for the third quarter, year-over-year. It plans to reduce its November 2020 flight schedule as well.
Southwest, which has one of the strongest financial positions among U.S. airlines, said it does not currently plan to utilize its loyalty program should it need to secure additional financing.
The airline had cash and short-term investments of about US$14.8-billion as of Sept. 15.
Earlier this week, bigger rival Delta Air Lines said it intends to raise US$6.5-billion through new bonds and loans, backed by its SkyMiles loyalty program, in efforts to bolster its cash position.
Boeing Co. (BA-N) was up 2.4 per cent in the wake of the Federal Aviation Administration (FAA) and a U.S. House panel concluding an 18-month investigation by saying the two 737 MAX crashes that killed all 346 passengers and crew aboard were the “horrific culmination” of failures by the planemaker.
The crashes “were not the result of a singular failure, technical mistake, or mismanaged event,” the House Transportation and Infrastructure Committee’s Democratic majority said in its highly critical report released on Wednesday.
“They were the horrific culmination of a series of faulty technical assumptions by Boeing’s engineers, a lack of transparency on the part of Boeing’s management, and grossly insufficient oversight by the FAA.”
The 737 MAX was grounded in March 2019 after the crash of Ethiopian Airlines Flight 302 near Addis Ababa which killed all 157 aboard.
In October 2018, a Lion Air 737 MAX had crashed in Indonesia killing all 189 on board.
“Boeing failed in its design and development of the MAX, and the FAA failed in its oversight of Boeing and its certification of the aircraft,” the report said, detailing a series of problems in the plane’s design and the FAA’s approval of it.
Eastman Kodak Co. (KODK-N) was up almost 37 per cent after a law firm hired by the company’s board said Tuesday that securities transactions made by Chief Executive Officer Jim Continenza around the time the photography equipment maker learned it could receive a US$765-million government loan did not violate internal policies.
However, an investigation found “gaps” in Kodak’s insider trading processes where certain individuals were not included on insider lists, Akin Gump Strauss Hauer & Feld LLP said in a report to a special committee of independent directors at Kodak’s board.
Kodak’s General Counsel was found to be overwhelmed and running on outdated policies, resulting in board members not being fully advised on relevant internal policies regarding options grants, the law firm said.
On the decline
The parent company of Tim Hortons expects to use the proceeds from the offering as well as cash on hand, to redeem a portion of the outstanding aggregate principal amount of 5.00-per-cent Second Lien Senior Secured Notes due 2025.
Shopify Inc. (SHOP-T) was down 4.9 per cent after it priced an offering to raise US$800-million in convertible senior notes and to sell 1.1 million subordinate voting shares at US$900 each, for gross proceeds of US$1.79 billion (about C$2.36-billion).
Adobe Inc. (ADBE-Q) slipped 4.4 per cent despite announcing better-than-anticipated quarterly results after the bell on Tuesday.
The California-based company reported revenue and earnings per share of US$3.23-billion and US$2.57, exceeding the Street’s projection of US$3.16-billion and US$2.41.
In a research note, analyst Alex Zukin of RBC Dominion Securities said: “Adobe reported very strong F3Q20 earnings highlighted by the largest net new DMARR [Digital Media annualized recurring revenue] beat in the company’s history. While guidance is conservative, expect investors to look through a combination of COVID and election uncertainties.”
With files from Brenda Bouw, staff and wires