A roundup of some of the North American equities making moves in both directions
On the rise
Bombardier Inc. (BBD.B-T) was higher after it said on Monday it expects first-quarter business jet revenues to rise by 18 per cent to $1.3-billion from a year ago, helped by improving demand for air travel.
The Montreal-based maker of Global aircraft will report results on Thursday.
Bombardier expects first-quarter business aircraft deliveries of 26 planes, the same number as delivered in the year-ago quarter, and it remains on track to deliver between 110-120 business aircraft in 2021.
The company’s full-year deliveries fell 20 per cent to 114 jets in 2020.
See also: Bombardier looks to change terms of debt after sale of train unit, other assets
Stella-Jones Inc. (SJ-T) jumped higher with the premarket release of better-than-anticipated first-quarter results.
The Quebec-based wood products manufacturer reported revenue of $623-million, up 23 per cent year-over-year and exceeding the Street’s forecast of $540-million. Adjusted earnings per share of 85 cents was an increase of 107 per cent and also blew past the consensus projection of 58 cents.
“More importantly, SJ increased its guidance for 2021 on the back of robust demand for the residential lumber segment,” said Benoit Poirier, an equity analyst at Desjardins Securities, in a research note. “While expectations for railway ties and utility poles are unchanged, management now expects residential lumber sales to increase 45–65 per cent year-over-year (up from mid- to high-single-digit), driven by higher pricing which is projected to continue during the seasonal peak demand period. As a result, management expects EBITDA to be in the range of $450–480-million in 2021 (up from $385–410-million); consensus was $391-million and our forecast was $389-million The guidance implies organic sales growth of 15 per cent to low-20 per cent in 2021 (up from low- to mid-single-digit).”
“Bottom line, we are very pleased with the solid results for the quarter, which again demonstrate the company’s resiliency amid the COVID-19 pandemic and its ability to deliver strong EBITDA and EPS growth. The positive guidance revision for 2021 is also testament to that. We would be buyers of the name this morning.”
Mississauga-based Cargojet Inc. (CJT-T) rose on the back of a premarket release of stronger-than-anticipated quarterly results.
The company reported revenue for the period, ending March 31, of $160.3-million, up from $123-million a year ago and exceeding the expectation of $150.4-million
“What was previously a consumer led shift to digital is now rapidly becoming a merchant led shift, accelerating the move to e-Commerce even further,” said President and CEO Ajay Virmani.
See also: Cargojet expands Amazon relationship by operating two of retail giant’s Boeing 767s in Canada
Shares of Waterloo, Ont-based Magnet Forensics Inc. (MAGT-T) rose higher with the close of its initial public offering.
The tech company soared in its debut on the Toronto Stock Exchange last Wednesday.
Shares in the cybersecurity company, which is stacked with former BlackBerry Ltd. executives, opened at $22.50 Wednesday, or 32 per cent above the issue price of $17 set the day before.
The IPO of 6.773 million subordinate voting shares, including underwriters exercising in full their option to purchase up to 883,500 additional shares, brought total gross proceeds of $115.149-million.
Verizon Communications Inc. (VZ-N) rose after announcing on Monday it has agreed to sell its media unit, that includes Yahoo and AOL, to Apollo Global Management Inc. (APO-N) for US$5-billion, as it looks to offload its digital media business.
Verizon has struggled to grow its media business, declaring them nearly worthless with a US$4.6-billion write-down in 2018. Bigger players such as Facebook and Google have sweeped the digital advertising market.
Verizon will get US$4.25-billion in cash, preferred interests of US$750-million and retain a 10-per-cent stake in Verizon Media, as part of the deal terms.
The business will be called Yahoo when the deal closes, which is expected in the second half of 2021, the company said.
Verizon Media’s portfolio includes online brands such as TechCrunch, Makers, Ryot and Flurry, according to its website. It reported revenue of US$1.9-billion in the first quarter of 2021.
In 2017, Verizon bought Yahoo’s internet properties for about US$4.48-billion, betting its 1 billion-plus users would be a fertile audience for online ads. It acquired email service AOL for US$4.4-billion in 2015.
Shares of Berkshire Hathaway Inc. (BRK.B-N, BRK.A-N) were higher after Warren Buffett ended long-running speculation about his successor by saying Greg Abel, who oversees the conglomerate’s non-insurance businesses, would be named chief executive if he were to step down.
Mr. Buffett told CNBC that “the directors are in agreement that if something were to happen to me tonight, it would be Greg who’d take over tomorrow morning.”
The 90-year-old Buffett has never publicly signaled any plan to step down. Mr. Abel has been a Berkshire vice chairman since 2018, after a decade building its Berkshire Hathaway Energy unit into a major U.S. power provider.
Berkshire did not immediately respond to requests for comment.
The announcement for now ends speculation that began in 2006 when Mr. Buffett, then 75, first discussed his plans for succession in his annual letter to Berkshire shareholders. He has run Berkshire since 1965.
Mr. Buffett also told CNBC that if anything happened to Mr. Abel, the chief executive job would go to Ajit Jain, who oversees Berkshire’s insurance businesses, but is about a decade older.
See also: Warren Buffett’s Berkshire Hathaway faces headwinds as shareholders look to its future
Calgary-based cannabis company High Tide Inc. (HITI-X) was up after signing a deal to buy an 80-per-cent stake in U.S. company Fab Nutrition LLC, which is focused on hemp-derived CBD products.
The Calgary-based company says it will pay US$20.64-million in shares and cash for the controlling stake and will have a three-year option to acquire the remaining 20 per cent.
The deal boosts High Tide’s presence in the U.S., where it launched its CBDCity subsidiary in May 2020.
Fab Nutrition, which operates as FABCBD, was founded in 2017 and is based in Milwaukee.
ATB Capital Markets analyst David Kideckel said: “We believe the transaction is positive for HITI as it expands the Company’s presence in the US CBD market through a direct-to-consumer e-commerce platform, offering cross-selling and synergy opportunities, such as offering FABCBD products in HITI’s other platforms (CBDCity, GrassCity, Smoke Cartel), as well as expanding distribution of FABCBD branded products to Canada and the EU. The transaction implies a 2020 EV/EBITDA of 6.0 times and an EV/Revenue of 2.4 times, compared to HITI’s 52.9 times and 5.8 times, respectively, thus being immediately accretive to HITI’s shareholders.”
Chicago-based Tyson Foods Inc. (TSN-N) rose after announcing it is launching plant-based hamburgers and sausages ahead of the summer grilling season, increasing competition for Beyond Meat (BYND-Q) as it releases an updated version of its own faux burger.
Purveyors of plant-based meat are seeking to boost sales as COVID-19 vaccinations encourage more people to eat at restaurants and gather for backyard cookouts and other events.
Companies like Beyond Meat and Impossible Foods aim to meet consumer demands for more climate-friendly diets, but sales of some of their products have slowed more recently as the plant-based trend cools.
Tyson Foods, the biggest U.S. producer of animal meat by sales, introduced its first plant-based products in 2019. It is adding burger patties, bratwurst, Italian sausage and ground “meat” made from pea protein to its offerings, according to a statement.
The burgers, marketed under Tyson’s Raised & Rooted brand, will be sold in packages of two quarter-pound patties at a suggested retail price of US4.99.
Tyson is making another attempt at an alternative burger after phasing out a patty last year that was a blend of beef and plants.
See also: Not Impossible, just unlikely: Wall Street’s plant-based love wilts
On the decline
Organigram Holdings Inc. (OGI-T) fell after announcing Greg Engel is stepping down from his chief executive post.
The Moncton, N.B.-based cannabis company did offer details on Mr. Engel’s departure, but says he will continue to act as a special advisor to the board during a “transition period.
Organigram’s board chairman Peter Amirault has been appointed to serve as executive chair on an interim basis and oversee day-to-day management of the company until a new CEO is named.
Mr. Engel has led the company since 2017 and was recently involved with signing Organigram’s $221-million deal with British American Tobacco.
In the months leading up to the deal, Organigram announced it would cultivate less cannabis than its Moncton facilities were designed to produce.
See also: Large cannabis companies are starting to experience growth headwinds because of fickle consumers
Estee Lauder Cos Inc. (EL-N) dropped after it missed analysts’ estimates for third-quarter sales on Monday, hurt by weak demand for the cosmetics maker’s premium makeup products as people continued working from home.
Cosmetics and makeup products have taken a hit during the COVID-19 pandemic as shoppers stay at home, pressuring foundation and lipstick sales of popular brands such as M.A.C and Bobbi Brown.
Sales at Estee Lauder’s makeup segment fell 11 per cent to US$1.0- billion.
Net sales rose to US$3.86-billion from US$3.35-billion a year earlier. Analysts had expected sales of US$3.94-billion, according to Refinitiv IBES data.
Net earnings attributable to the company was US$456-million, or US$1.24 per share, in the third quarter ended March 31, compared with a loss of US$6-million, or 2 US cents per share, a year earlier.
Electric vehicle maker Tesla Inc. (TSLA-Q) slid after a Reuters report that it is facing scrutiny in China over safety and customer service complaints, is boosting its engagement with mainland regulators and beefing up its government relations team, industry sources said.
Tesla’s change of strategy leading to more behind-the-scenes interaction with policymakers in Beijing compared to relatively little previously shows the seriousness with which the U.S. automaker views the setbacks in its second-biggest market.
It also comes at a time when China is trying to regulate large and powerful private companies, especially in the technology sector, on concerns about their market dominance.
Tesla did not immediately respond to a request for comment on Monday, a public holiday in China.
As they do elsewhere, regulators in China, the world’s biggest auto market, discuss industry policies and standards with global and local companies, industry associations and think tanks.
With files from staff and wires
David Leeder