A roundup of some of the North American equities making moves in both directions today
On the rise
Dollarama Inc. (DOL-T) rose even though it missed analysts’ estimates for fourth-quarter sales on Wednesday as COVID-19 restrictions during the holiday season dented traffic at its stores.
The discount store chain said its business took a hit due to more stringent measures by provincial authorities in December, including stricter in-store capacity limits, and a temporary ban on the sale of non-essential items in Quebec.
However, Dollarama said sales had improved in the current quarter with the gradual lifting of such curbs and that it plans to open 60 to 70 stores for this fiscal year.
The company also said it had increased its long-term growth target to 2,000 stores in Canada by the next decade, from a previous aim of 1,700 stores by 2027.
Discount and off-price retailers, known for their treasure-hunt shopping experience, have continued to expand their store networks as they benefit from consumers making the bulk of their purchases under a single roof.
Dollarama’s net earnings fell to $173.9-million, or 56 cents per share, in line with analyst estimates, from $178.7-million, or 57 cents per share a year earlier.
Net sales rose to $1.10-billion in the fourth quarter ended Jan. 31, from $1.07-billion a year earlier, below Refinitiv IBES estimates of $1.13-billion.
The company said it would raise its quarterly dividend by 7 per cent and intends to resume share buybacks in 2022
Laval, Que.-based Bausch Health Companies Inc. (BHC-T) gained ground on Wednesday after announcing a definitive agreement to sell all its stake in Egypt’s Amoun Pharmaceutical Co SAE to Abu Dhabi-based ADQ for about US$740-million, as the company looks to reduce its debt.
Valeant had purchased Amoun for about US$800-million in 2015 to expand into the Middle East and North African pharmaceuticals market.
The Toronto-based funeral home and cemetery operator reported revenue of $93.3-million, up 35 per cent year-over-year and above the consensus forecast of $85.1-million. Adjusted earnings per share of 35 cents topped the 26-cent estimate.
In a research note, Acumen Capital analyst Jim Byrne said: “We believe the Q4 results reinforce our thesis that PLC is well positioned for growth in revenue and margin expansion through organic and inorganic opportunities.”
Gibson Energy Inc. (GEI-T) was higher with the premarket announcement that it has entered into a long-term agreement with Suncor Energy Inc. SU-T) for services at its Edmonton Terminal and sanctioned the construction of the Biofuels Blending Project at the facility under a 25-year term.
ATB Capital Markets analyst Nate Heywood said: “Overall, we view the announcement as positive, given the long-term nature of the contract, the combining of all contracted assets into one agreement, and the development of new assets at the Edmonton terminal. Looking forward, the Edmonton terminal should benefit from Canadian egress projects, including the ongoing development of the Trans Mountain Expansion project (TMX), and the focus on a biofuels project is supportive of the energy transition and environmental sustainability.”
Pfizer Inc. (PFE-N) increased after it announced Wednesday that its COVID-19 vaccine is safe and strongly protective in kids as young as 12, a step toward possibly beginning shots in this age group before they head back to school in the fall.
Most COVID-19 vaccines being rolled out worldwide are for adults, who are at higher risk from the coronavirus. Pfizer’s vaccine is authorized for ages 16 and older. But vaccinating children of all ages will be critical to stopping the pandemic — and helping schools, at least the upper grades, start to look a little more normal after months of disruption.
In a study of 2,260 U.S. volunteers ages 12 to 15, preliminary data showed there were no cases of COVID-19 among fully vaccinated adolescents compared to 18 among those given dummy shots, Pfizer reported.
It’s a small study, that hasn’t yet been published, so another important piece of evidence is how well the shots revved up the kids’ immune systems. Researchers reported high levels of virus-fighting antibodies, somewhat higher than were seen in studies of young adults.
Drugstore chain Walgreens Boots Alliance Inc. (WBA-Q) said on Wednesday it has so far administered 8 million COVID-19 vaccines and raised its 2021 profit forecast, sending its shares up.
While the pandemic has affected prescription volumes in recent quarters, pharmacy chains Walgreens and CVS Health Corp are likely to benefit from distribution of COVID-19 vaccines and tests. Last quarter, Walgreens said it expected to profit from its vaccination program in the second half of 2021.
Walgreens on Wednesday beat second-quarter profit estimates due to higher sales at its pharmacy stores in the U.S. and the UK.
The company said same store sales at its U.S. pharmacies rose 4.5 per cent in the second quarter, as it filled 288.5 million prescriptions, while the sales at Boots UK pharmacies increased 3.2%
Walgreens raised its 2021 forecast to mid-to-high single digit growth in constant currency adjusted earnings per share from low single-digit adjusted EPS growth.
Chewy Inc. (CHWY-N) jumped as brokerages raised their price target on the stock after the online pet product retailer posted fourth quarter profit from year-ago loss.
Credit Suisse analyst Erin Wilson Wright said: “With CHWY’s shares more recently under pressure, we view sentiment should reverse on the latest 4Q upside, which reflects the inherent resiliency of pet spending and favorable channel shifts amidst COVID-19, including a sequential acceleration in net new customer growth (up 93 per cent vs. 72 per cent in 3Q), a key focus area, particularly as pandemic dynamics begin to normalize. Moreover, CHWY initiated an impressive 2021 guide, calling for healthy topline growth and notably better than expected profitability, despite stepped up labor expenses ($60-million). We are further encouraged by the favorable sales mix towards higher-margin private label, hardgoods, and pharmacy (now 5 per cent of sales) segments, together contributing 150 bps to gross margin expansion. On valuation, its shares currently trade at 3.1 times calendar 2022 enterprise value-to-sales, a discount to its broader peer group of ecommerce retail, animal health, and healthcare IT services companies (3.7 times), not fully reflecting its rapid growth trajectory and longer-term profit opportunity. Risks: competition, consumer spending shifts, ad spend. Of note, CHWY has seen consumers to some extent gravitate more towards OTC topical parasiticides recently (from collars) likely offsetting the potential impact from ELAN’s potential Seresto disruption, a dynamic we will continue to monitor going forward.”
ODP Corp. (ODP-Q) was narrowly lower after office supplies retailer Staples Inc. said on Wednesday it would evaluate “all alternatives” to acquire it, weeks after the Office Depot and OfficeMax owner turned down the bigger rival’s proposal to buy some of its assets.
ODP earlier this month rejected the offer, saying it lacked basic deal terms including a purchase price.
Staples, owned by buyout firm Sycamore Partners, said on Wednesday its options may include ODP’s retail and consumer facing business, its operations in Canada and certain other assets.
ODP in January had rejected Staples’ more than US$2-billion bid and instead proposed merging only the companies’ consumer-focused retail operations to avoid regulatory scrutiny.
Staples has over the past two decades made repeated attempts to buy ODP, but they failed due to regulatory concerns.
On the decline
BlackBerry Ltd. (BB-T) missed Wall Street estimates for fourth-quarter revenue on Tuesday, even as the company said sales of its QNX car software showed improvement.
Shares of BlackBerry, which sells security software to companies and governments as well as infotainment software to carmakers, fell in Wednesday trading.
Demand for the company’s QNX car software, used by automakers such as Volkswagen and Ford Motor, had been under pressure due to a slow recovery in the U.S. auto industry amid a global semiconductor shortage and pandemic-related weakness.
“This has been an exceptional year to navigate, however we are pleased with QNX’s continued recovery, despite new challenges from the global chip shortage,” said Chief Executive Officer John Chen.
BlackBerry was also one of the so-called “stonks” that received major attention from investors after a social-media driven retail short squeeze frenzy. The term “stonk” is used to describe stocks with convoluted prospects that are popular with retail traders on online forums.
The company’s U.S.-listed shares had gained nearly 41 per cent so far this year.
ARC Resources Ltd. (ARX-T) was lower after Seven Generations Energy (VII-T) shareholders on Wednesday approved its plans to buy the company, paving the way for a deal to create the country’s sixth-largest energy firm.
The preliminary announcement was made on the company’s virtual special shareholders meeting, with no details on how many votes were cast in favor of the deal.
Lululemon Athletica Inc. (LULU-Q) slid after it warned of more store closures and risks to demand from a potential resurgence in COVID-19 cases, even as it forecast first-quarter revenue above analysts’ estimates.
The company said any surge in cases, including the new variants, could hamper demand and disrupt supply chain at a time its stores are struggling with capacity restrictions, sending its shares down.
The company’s stock, however, has gained 64 per cent over the past 12 months, as Lululemon saw a surge in demand for its leggings and sports bras from stuck-at-home consumers looking for comfortable apparel.
“Regardless of vaccines, the sense of comfort will continue to sell and Lululemon has found a very strong assortment in between comfort and active wear,” said Jessica Ramirez, retail analyst at Jane Hali & Associates.
The company is also banking on its home fitness startup acquisition, Mirror, to provide an additional revenue stream this year, and expects its top line to rise as much as 65 per cent to US$275-million in 2021 on booming demand for online workout classes.
With files from staff and wires