A roundup of some of the North American equities making moves in both directions
On the rise
Bausch Health Companies Inc. (BHC-T) saw gains after saying it expects its revenue for 2020 to top its guidance for the year, following a strong finish.
The company says it expects its revenue to total more than US$2.2-billion for its fourth quarter.
It also says revenue for its full year is expected to beat its guidance for between US$7.8-billion and US$8-billion.
Bausch Health made the comments ahead of a presentation at an investor conference.
The company expects to release its full financial results for the fourth quarter and the full year next month.
Analysts on average had expected US$2.1-billion in revenue for the fourth quarter and US$7.9-billion for the full year, according to financial data firm Refinitiv.
Intel Corp. (INTC-Q) jumped after it announced it will replace Chief Executive Officer Bob Swan with VMware Inc. (VMW-N) CEO Pat Gelsinger next month
Intel said its announcement is unrelated to its financial performance in 2020.
Mr. Swan, a former chief financial officer from eBay, had served as Intel’s finance chief and was named its interim CEO when Brian Krzanich resigned in June 2018.
Mr. Swan was made permanent chief in early 2019 after an extensive search failed to yield an external candidate.
A day after rising 6.2 per cent, General Motors Co. (GM-N) continued to increase after announced its entry into the growing electric delivery vehicle business.
The new BrightDrop delivery business will put GM squarely in competition in the commercial sector with cross-town rival Ford Motor Co, as well as startups such as Rivian, Arrival and Canoo that are developing electric commercial vehicles for customers ranging from Amazon to Hyundai Motor.
Fueled in part by the COVID-19 pandemic, GM estimates the U.S. market for parcel and food delivery will climb to more than $850 billion by 2025. It is one sector that EV sales leader Tesla has yet to crack.
Exxon Mobil Corp. (XOM-N) rose after J.P. Morgan become the latest major U.S. investment bank to turn positive on it, just months after its removal from the blue-chip Dow Jones Industrial Average capped a catastrophic year for America’s major oil producers.
The shift to an “overweight” rating by the bank was the first time in seven years that J.P. Morgan had outright recommended investors bet on Exxon, dating back to the drop in oil prices below $100 in mid-2014.
Morgan Stanley also upgraded the company to “overweight” on Monday, while Goldman Sachs and Wells Fargo both issued positive recommendations last month, a sign of Wall Street’s approval of radical cuts the company has made in spending as well as how much its share price has fallen since last March.
“Improved transparency, cost reduction actions and increased investor pressure could all serve to push Exxon to put up more consistent results,” J.P. Morgan analyst Phil Gresh said in a note.
Mr. Gresh is rated a maximum five stars for accuracy by Refinitiv and J.P. Morgan is one of 8 brokerages that rate the stock “buy” or higher, while 15 rate it “hold” and another 4 “sell” or lower.
The oil sector was among the most heavily sold in last year’s coronavirus sell-off, and has struggled to recover since as a wave of bankruptcies, asset writedowns and dividend cuts shook confidence in the sector.
On the decline
Canadian convenience store giant Alimentation Couche-Tard Inc. (ATD.B-T) plummeted after saying it has approached French grocer Carrefour SA with a view to striking a friendly transaction in what would be a significant shift in strategy for the Circle K brand owner.
Couche-Tard said in a statement late on Tuesday it has initiated “exploratory discussions” with Carrefour about a deal, the terms of which are still subject to discussion. At this stage, it is unclear whether the talks will result in an agreement or transaction, the company said. Carrefour also confirmed “very preliminary” discussions were under way.
The structure of a possible deal was not disclosed, but the discussions centre on Couche-Tard buying Carrefour in its entirety and divesting assets as necessary, said a person familiar with the matter. The Globe is not identifying the source as they were not authorized to speak to the media.
Taking over supermarket operator Carrefour would be a major bite for Couche-Tard to swallow. Carrefour shares have climbed 10 per cent in trading on the Paris Stock Exchange this year, pushing up the company’s market capitalization to 12.6 billion euros (about US$15.4-billion). Couche-Tard, one of Canada’s biggest companies by revenue, has a market value of $47-billion (US$36-billion).
- Nicolas Van Praet
Shaw Communications Inc. (SJR.B-T) was lower after its first-quarter results slightly missed analyst expectations, even as the company saw a record high number of new wireless subscribers following the launch of its new Shaw Mobile service in Western Canada.
The Calgary-based cable company had $1.37-billion in revenue for the three months ended Nov. 30, 2020, down 0.9 per cent from a year ago when it reported $1.38-billion in revenue. Its first-quarter profit came to $163-million, up 0.6 per cent from $162-million a year ago.
The quarterly earnings amounted to 31 cents per basic and diluted share, unchanged from a year ago.
Analysts had been expecting $1.38-billion in revenue and earnings of 32 cents per share, according to the consensus estimate from S&P Capital IQ.
The company added 101,029 net new wireless subscribers during the quarter, including 87,296 postpaid customers and 13,733 prepaid subscribers. (Postpaid customers are those who are billed at the end of the month for the services they used, versus prepaid subscribers, who pay upfront for wireless services.)
- Alexandra Posadzki
Air Canada (AC-T) lost ground after confirming it will cut 1,700 jobs as it scales down flights for the first quarter of 2021.
The 25 per cent reduction in service will also affect 200 employees at Air Canada’s Express carriers, the company said Wednesday morning.
With the reduction, Air Canada’s capacity in the first quarter of 2021 will be about 20 per cent of its capacity during the first quarter of 2019, the company says.
Lucie Guillemette, Air Canada’s executive vice president and chief commercial officer, said in a statement that increased travel restrictions by federal and provincial governments have had an immediate impact on the company’s bookings.
Air Canada notified airports in Atlantic Canada this week that it would cut additional routes in the region, suspending all flights in Gander, N.L., Goose Bay, N.L., and Fredericton, N.B., until further notice.
Air Canada is contacting affected customers to offer them options such as refunds or alternative travel arrangements.
See also: Air Transat board reaffirms support for Air Canada’s takeover bid
Blackberry Ltd. (BB-T) was lower after the Globe and Mail reported it has sold 90 patents to controversial Chinese technology giant Huawei Technologies Co Ltd., part of a broader effort by the Waterloo, Ont., smartphone pioneer to unload most of its intellectual property.
Records from the U.S. Patent and Trademark Office, or USPTO, show that BlackBerry assigned ownership of the patents to Huawei on Dec. 23. They represent a tiny fraction of BlackBerry’s trove of 38,000 patents but cover many key advances dating from when it was the world’s leading smartphone maker to protect the intellectual property around its handheld devices.
While the sale is the latest step in BlackBerry chief executive officer John Chen’s multiyear efforts to refocus the company, it raises questions about the Canadian government’s innovation strategy and its commitment to protect key assets from falling into the hands of foreign companies, particularly those whose motives have raised alarms among Canada’s national security allies.
- Sean Silcoff
Retail landlord First Capital Real Estate Investment Trust (FCR.UN-T) fell in the wake of cutting its monthly distribution in half as economic shutdowns escalate across Canada, marking the second major retail REIT to slash its payout over the past month.
First Capital will now pay a distribution worth 43.2 cents per unit annually, down from 86 cents, saving the REIT roughly $95-million a year. The decision was announced after stock markets closed Tuesday, and First Capital’s management said it hopes to restore the distribution to its previous level after two years.
In a statement, management said the cut provides the REIT “with meaningful financial flexibility to advance its strategic objectives.”
On top of the tough economic environment, First Capital has been under pressure to lower its debt burden after borrowing hundreds of millions of dollars to buy back some of its units from a large investor.
Many retail REITs, including First Capital, have also committed to funding new developments of condos and rental apartment buildings at malls and other sites in order to diversify their property mix as more shopping moves online.
- Tim Kiladze
Goodfood Market Corp. (FOOD-T) fell in the wake of reporting better-than-anticipated first-quarter financial results before the bell.
The Montreal-based home meal kit company announced revenue and EBITDA of $91.4-million and $1.4-million, respectively, exceeding the Street’s projections of $87.1-million and $0.4-million. It ended the quarter with 306,000 subscriptions, up 33 per cent year-over-year.
In a research note, Acumen Capital analyst Jim Byrne said: “The company’s Q1/F21 results were positively impacted by the increased demand for home delivery of mealkits and groceries brought on by COVID-19. Since the beginning of March, the company has seen increased subscribers, order value, and order rates because of the pandemic.
“With recent lockdowns resuming in Quebec and Ontario, we believe the momentum should continue to drive revenue growth significantly higher over the next several quarters.”
Target Corp. (TGT-N) was down despite extending its strong sales streak through a pandemic-shrouded holiday season after a hard push online and an increased effort to provide alternatives to customers who are trying to minimize risk.
The retailer reported Wednesday that online sales surged 102 per cent between November and December. Sales at its stores opened for a least a year rose 4.2 per cent. Customer traffic rose 4.3 per cent, and the average amount of sales per customer rose 12.3 per cent as they consolidated trips to different stores during the pandemic.
Target continued to gain market share in all five its core merchandise areas. Sales were strongest in its home and furniture departments.
Target was forced to come up with a new strategy during a period when store aisles are typically teaming with customers leading into Christmas.
It aggressively discounted prices starting in early in October to get an early start on an unprecedented shopping season. That offset the closing of stores on Thanksgiving, which for years has been the starting gun for the holiday shopping blitz. Black Friday doorbuster deals went online as Target and other retailers tried to to manage traffic in stores.
New Fortress Energy Inc. (NFE-Q) fell after it said on Wednesday it would buy Hygo Energy Transition Ltd, a 50-50 joint venture between Golar LNG Ltd. (GLNG-Q) and Stonepeak Infrastructure Fund II Cayman, for US$2.18-billion to expand its presence in South America.
The deal is less than four months after the then chief executive of Hygo, which transports liquefied natural gas and operates related infrastructure, was named in a corruption investigation in Brazil. The investigation is in its early phase and the former CEO has not been charged.
The energy infrastructure company will acquire all of the outstanding shares of Hygo for 31.4 million shares of NFE Class A common stock and US$580-million in cash.
New Fortress also agreed to buy Golar LNG Partners LP for about US$251-million, or $3.55 per common unit, in cash. The company has also agreed to acquire Golar LNG Partners’ general partner, with the total deal at a US$1.9-billion enterprise value.
Dropbox Inc. (DBX-Q) on Wednesday announced the exit of operations chief and said it will cut 11% of its global workforce, or 315 people, as the file hosting service provider shifts business resources in the wake of the COVID-19 pandemic.
Shares fell after Dropbox said Chief Operating Officer Olivia Nottebohm, who joined last year from Alphabet Inc’s Google, will step down on Feb. 5.
Dropbox did not provide details of a replacement for the COO.
“Our Virtual First policy means we require fewer resources to support our in-office environment, so we’re scaling back that investment and redeploying those resources to drive our ambitious product roadmap,” Chief Executive Officer Drew Houston said in a letter to employees on Wednesday.
The San Francisco-based company had said in October that remote work due to the COVID-19 pandemic will be a primary experience for its employees and its physical spaces will no longer be for daily individual work.
With files from staff and wires