A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of videogame retailer GameStop Corp. (GME-N) continued to surge on Wednesday as amateur investors continued to pile into the stock that has skyrocketed nearly 700 per cent over the past two weeks.
The share spikes in GameStop and others including BlackBerry Ltd (BB-T), headphone maker Koss Corp. (KOSS-Q) and Nokia Oyj , have sent short-sellers scrambling to cover losing bets, while raising questions about potential regulatory clampdowns.
The top securities regulator in Massachusetts thinks trading in GameStop stock, which has jumped to US$148 a share from US$19.95 since Jan. 12, suggests there is something “systemically wrong” with the options trading surrounding the stock, Barron’s reported on Tuesday.
Montreal-based CGI Inc. (GIB.A-T) was up after topping expectations as it reported its first-quarter profit rose to $343.5-million compared with $290.2-million a year earlier, helped by improved margins and lower restructuring and integration costs.
The technology and business consulting firm says the profit amounted to $1.32 per diluted share for the quarter ended Dec. 31, up from $1.06 per diluted share in the same quarter a year earlier.
Revenue totalled $3.02-billion, down from $3.05-billion.
CGI says the most recent quarter included $3.7-million in acquisition-related and integration costs compared with the same quarter a year earlier that saw $16.5-million in acquisition-related and integration costs and $28.2-million in restructuring costs.
Excluding specific items, CGI says it earned $1.33 per diluted share for its most recent quarter, up from $1.23 per diluted share a year earlier.
Analysts on average had expected an adjusted profit of $1.24 per share, according to financial data firm Refinitiv.
Microsoft Corp. (MSFT-Q) on Tuesday after the bell reported its Azure cloud computing services grew 50 per cent, the second quarter of acceleration in a business that had begun to slow as the global pandemic benefited the software maker’s investment on working and learning from home.
The company’s shares rose after gaining about 41 per cent in 2020 as COVID-19 shifted computing to areas where the software maker has bet big. It also saw a surprise recovery in sales on the LinkedIn professional social network and navigated a chip shortage that had threaten to hold back its Xbox business.
The shift to work from home due to the COVID-19 pandemic has accelerated enterprises’ switch to cloud-based computing, benefiting Microsoft and rivals such as Amazon.com Inc’s cloud unit and Alphabet Inc’s Google Cloud.
Microsoft said revenue in its “Intelligent Cloud” segment rose 23 per cent to US$14.6-billion, with 50-per-cent growth in Azure. Analysts had expected a 41.4-per-cent growth in Azure, according to consensus data from Visible Alpha. The previous quarter Azure grew 48 per cent.
“This was really driven by continued customer demand, with stronger-than-expected consumption as customers have increased their focus on digital transformation,” Microsoft Chief Financial Officer Amy Hood told Reuters in an interview.
Walgreens Boots Alliance Inc. (WBA-Q) jumped after the drugstore chain named the outgoing chief operating officer of Starbucks, Roz Brewer, as its chief executive officer.
Ms. Brewer will take office from March 15. She succeeds Stefano Pessina, who will transition to the role of executive chairman of the Walgreens board, the drugstore chain said in a statement.
Mr. Pessina served as CEO of the company for six years following the merger of Walgreens and Alliance Boots in December 2014. Walgreens said in July that Mr. Pessina was going to step down.
Mr. Pessina will replace James Skinner as executive chairman of Walgreens in March. Mr. Skinner will remain on the board as a non-executive director to facilitate a leadership transition, the company said.
Prior to joining Starbucks, Ms. Brewer served as president and CEO of warehouse chain Sam’s Club, a unit of Walmart Inc , where she worked from 2012 to 2017.
Blackstone Group Inc. (BX-N), the world’s largest manager of alternative assets, erased early losses and rose in the wake of saying on Wednesday its fourth-quarter distributable earnings rose 60 per cent year-on-year driven by a surge in asset sales across its private equity and real estate business lines that was partly offset by compensation expenses.
Distributable earnings - cash available for paying dividends to shareholders - totaled US$1.46-billion, up from US$914-million a year earlier. This translated into distributable earnings per share of US$1.13, outperforming analysts’ average estimate of 89 US cents, according to financial data provider Refinitiv.
During the quarter, Blackstone completed the US$14.6-billion sale of BioMed Realty Trust, America’s largest private owner of medical office buildings, and the divestment of its 36% shareholding in British insurer and annuity provider Rothesay Life.
A sharp rise in investment income helped Blackstone report a net income of US$748.9-million under generally accepted accounting principles (GAAP), up 55 per cent from the previous year.
Blackstone said its private equity portfolio appreciated 10.6 per cent in the quarter, compared with an 11.7-per-cent rise in the benchmark S&P 500 stock index over the same period. Opportunistic and core real estate funds rose 4.3 per cent and 5.5 per cent respectively.
Shares of Oaktree Capital-backed Shoals Technologies Group Inc. (SHLS-Q) jumped more than 25 per cent in their Nasdaq debut on Wednesday, giving the solar-power components maker a market capitalization of over US$5-billion.
The debut comes as a string of companies rush to capitalize on the red-hot U.S. initial public offering (IPO) market that shattered records over the past year.
A number of other clean energy companies have also gone public recently, including those who opted for blank-check deals to debut on stock exchanges such as electric-vehicle startups Nikola Corp and Fisker Inc.
Shoals’ shares opened at US$31.3, well above their IPO price of US$25 per share. The company offered 77 million shares in its upsized IPO, raising about US$1.9-billion.
Portland, Tennessee-based Shoals provides so-called electrical balance of system, or EBOS, solutions for solar energy projects, which involve all of the components that are necessary to carry the electric current produced by solar panels to an inverter and ultimately to the power grid.
On the decline
Prior to the post-market release of its quarterly earnings, Canadian Pacific Railway Ltd. (CP-T) was up after announcing before the bell its Board of Directors will seek shareholder and regulatory approval for a five-for-one common share split.
“CP’s share price has increased in value by 150 percent in the past five years,” said President and CEO Keith Creel. “We believe that the share split will encourage greater liquidity for CP’s common shares and provide opportunities for ownership by a wider group of investors than is currently available.”
It also announced it has gained approval to implement a normal course issuer bid to purchase for cancellation up to 3.33 million common shares or approximately 2.5 per cent of outstanding shares at at Jan. 15.
Several equity analysts cut their target prices for CN shares, including RBC Dominion Securities analyst Walter Spracklin, who said:
““With guidance coming in so far below consensus, we expect the market reaction to be negative today. We expect that negative sentiment to prevail for some time until a (potential) catalyst emerges.”
In a research note, Canaccord Genuity analyst Dalton Baretto said: “We expect a mixed 2021 for FM. On a positive note, the company should benefit from higher production growth (10-per-cent copper equivalent) along with ongoing investor enthusiasm for “pure play” copper producers and a potential JV transaction with a Chinese partner at the Zambian assets. On a negative note, FM’s cash flows will be relatively suppressed given the substantial hedging program (36 per cent of 2021 production at prices well below $3.00 per pound), and we note ominous rhetoric around levels of State ownership in mining assets emanating from Zambia (43 per cent of NAV).”
Boeing Co. (BA-N) dropped after taking a hefty US$6.5-billion charge on its all-new 777X jetliner as it posted a record annual loss on Wednesday due to the coronavirus pandemic and the aftermath of a two-year safety crisis over its 737 MAX.
The coronavirus crisis has exacerbated a drop in demand for the industry’s largest jetliners, with airline customers shunning deliveries of planes due to international travel restrictions, hurting cash flow at the U.S. planemaker.
Boeing said it now expects the 777X, a larger version of the 777 mini-jumbo, to enter service by late 2023, delaying the jet’s entry for the third time, due to tougher certification requirements after the 737 MAX safety crisis and plummeting demand.
The company has been developing the widebody jet with the goal of releasing it in 2022, already two years later than planned.
“2020 was a year of profound societal and global disruption which significantly constrained our industry,” Boeing Chief Executive Dave Calhoun said in a statement accompanying results.
Boeing shares fell to a more than two-month low of $193.
A historic slump in air travel and expanded inspections over production defects halted deliveries of dozens of 787s to airlines, cutting off a key source of cash just as Boeing works to clear an inventory of about 450 737 MAX jets.
AT&T Inc. (T-N) slid after it said on Wednesday it wrote down its premium TV business, which includes satellite television unit DirecTV, by US$15.5-billion, reflecting the impact of years of cord-cutting in the industry as viewers move to cheaper online streaming services.
The fourth-quarter writedown comes as sources have told Reuters AT&T has entered into exclusive talks to sell a minority stake in DirecTV to private equity firm TPG in a deal seen valuing the division at above US$15-billion.
AT&T purchased DirecTV for US$68-billion including debt in 2015.
The writedowns taken by AT&T, which further included US$780-million from its WarnerMedia business because of pandemic-related production and cinema shutdowns last year, partially eclipsed good news from the company’s core wireless business, which added almost twice as many phone subscribers than Wall Street had expected.
During the fourth quarter, AT&T added 800,000 net new phone subscribers who pay a monthly bill, beating analyst expectations of 475,300 customers, according to research firm FactSet.
The growth was helped by the launch of the new 5G iPhone during the quarter.
Excluding asset impairment, benefits and merger-related costs, AT&T earned 75 US cents per share, surpassing analyst estimates of 73 US cents, according to Refinitiv data.
The world’s largest coffee chain’s global same-store sales fell 5 per cent in its first quarter, which ended Dec. 27, more than analysts’ estimates of a 3.4-per-cent decline, according to Refinitiv IBES data.
The second wave of COVID-19 infections and accompanying restrictions dented traffic at the coffee chain’s stores, hampering its efforts to boost demand through product launches and new drive-thrus.
Comparable sales declined 6 per cent for the Americas region, compared with a 5.2-per-cent fall expected by analysts.
But in China, Starbucks’ biggest growth market, comparable sales rose 5 per cent as the company benefited from the popularity of its rewards program and the return of pre-coronavirus consumer habits.
Advanced Micro Devices (AMD-Q) fell despite beating quarterly revenue estimates and forecasting a robust 2021 on strong demand for its chips used in PCs, data centers and gaming consoles from companies and customers adapting to remote working.
The company has been prying away central processor market share from rival Intel Corp, whose manufacturing operations have stumbled in recent years while contract factories used by AMD such as Taiwan Semiconductor Manufacturing Co grabbed a lead in making faster chips.
With the US$35-billion buyout deal for chipmaker Xilinx Inc in October, AMD aims to bolster its data center chip business.
The company also supplies chips for gaming consoles, with sales bolstered in the fourth-quarter by new devices from Microsoft and Sony during the holiday season quarter. But the consoles were in persistently short supply at retail outlets because of a global chip shortage that affected AMD and other players.
AMD’s fourth-quarter revenue rose to US$3.24-billion, beating analysts’ estimate of US$3.03-billion, according to IBES data from Refinitiv. Excluding items, the company earned 52 US cents per share, topping estimates of 47 US cents.
With files from staff and wires