A roundup of some of the North American equities making moves in both directions today
On the rise
Lululemon Athletica Inc. (LULU-Q) jumped 14.3 per cent on Thursday after the retailer’s full-year profit forecast came in above analysts’ estimates alongside the release of better-than-expected fourth-quarter financial results.
The Vancouver-based company projects 2019 earnings per share of US$4.48 to US$4.55, versus analysts’ forecast of US$3.61 per share.
For the key holiday quarter, its net income rose to US$218.5-million, or US$1.65 per share, up from US$119.8-million, or 88 US cents per share, during the same period a year ago. Excluding one-time items, the company earned US$1.85 per share, beating the average analyst estimate of US$1.74.
In reaction to the news, several equity analysts increased their target price for Lululemon shares.
Credit Suisse’s Michael Binetti said: “Despite our recent concerns that LULU may have to explain weather issues that we think are hurting U.S. retailers in 1Q to date (which PVH Corp. confirmed Wednesday night), 1Q SSS guide to increase low double-digits (we were modeling 8 per cent) confirms that LULU's product cycle and initiatives are overriding powerful macro industry headwinds.”
PVH Corp. (PVH-N), an apparel maker that possesses a portfolio that includes Tommy Hilfiger, rose 14.7 per cent after its full-year adjusted profit and sales topped Wall Street expectations.
New York-based PVH forecast full-year adjusted profit between US$10.30 and US $10.40 per share, versus the analysts’ estimate of US$10.31.
The company also forecast full-year sales growth of 4 per cent that translates to about US$10.04-billion, above the Street’s estimate of US$9.88-billion.
On Thursday, PVH Corp said it would exit the high-end collection of Calvin Klein and shut the label’s flagship store in New York’s Madison Avenue.
The company also said it was in talks with North America apparel partner G-III Apparel Group LTD to take over the brand’s women’s jeans unit.
“We believe this was the right decision for the long-term health of the brand as the existing high-end business was not resonating with our core consumer,” Chief Executive Officer Emanuel said on a post earnings call.
Park Lawn Corporation Ltd. (PLC-T) sat 6.9 per cent higher after releasing fourth-quarter results after market close that exceeded expectations on the Street.
An equity analyst at Cormark Securities upgraded its stock, while several others raised their target prices.
CIBC World Markets’ Scott Fromson said: “We view PLC’s Q4/18 beat as supporting our view that management can deliver on its growth strategy of acquisitions, organic growth and margin expansion. We have greater confidence that PLC can grow revenues organically in excess of the 5-per-cent industry rate and foresee adjusted EBITDA margins moving from 2018′s 21.5 per cent to 25 per cent in 2020, near industry leaders’ levels.”
Valener Inc. (VNR-T) jumped 11 per cent after announcing it has an agreement to be acquired by Noverco Inc. for $26 per common share in cash and $25 per preferred share in cash.
Industrial Alliance Securities analyst Jeremy Rosenfield said: "We believe that the proposed all-cash $26.00 per share offer for VNR reflects a fair value of the company’s current operations, including near-term growth expectations. Noverco’s offer would also provide immediate liquidity and value certainty for VNR shareholders, with no financing risk, minimal expected regulatory risk, and minimal expected regulatory lag. We recommend shareholders tender their shares to the proposed offer, and are adjusting our rating and target accordingly.”
Aimia Inc. (AIM-T) increased 1.6 per cent after revealing its strategic plan to move forward in the wake of the sale of its Aeroplan program, including a 25-per-cent reduction in its workforce and repurchasing up to $150-million of its outstanding common shares.
"The thorough analysis undertaken by the Special Committee with management has led us to the firm conclusion that there is a tremendous opportunity available to Aimia at this juncture in the evolution of the loyalty and travel sectors. A strong balance sheet, the ability to react quickly and our unique loyalty and travel sector expertise will differentiate Aimia as a strategic acquirer or investor in these markets over the longer term, while the company's tax assets can provide incremental value to acquisitions, said Bill McEwan, incoming Chairman of the Board of Directors.
“Our capital allocation strategy will be two-pronged: returning capital to shareholders while retaining sufficient financial flexibility to execute on our strategy, which is expected to deliver very strong returns for the company and its stakeholders.”
The announcement came after Laughing Water Capital, LP, which describes itself as a “significant shareholder,” issued a public letter to the company board on Wednesday calling on its legacy directors to resign.
Savaria Corp (SIS-T) was up 5.9 per cent after it reported quarterly results after the bell on Wednesday that largely met the Street’s expectations.
Laurentian Bank Securities analyst Nick Agostino said: “Results were generally as expected and in-line with pre-guided values. 2019 guidance was maintained, with margins remaining under pressure following recent acquisitions.”
Boeing Co. (BA-N) increased 0.02 per cent after the aerospace giant outlined proposed updates to the software system and new pilot-training requirements for its 737 Max aircraft, which are grounded worldwide after two unexplained crashes killed 346 passengers and crew.
Dollarama Inc. (DOL-T) erased early losses and rose 1.4 per cent despite its fourth-quarter profit falling just short of expectations on the Street.
Before market open, the discount retailer reported net income for the quarter rose to $171.98-million, or 54 cents per share, from $162.83-million, or 48 cents per share, during the same period a year ago. Analysts had projected a 55-cent profit.
Sales of $1.0597-billion was a rise of 13 per cent year-over-year but also below the consensus estimate ($1.07-billion).
“In Fiscal 2020, our priority is to continue to re-invest in our strong value proposition and enhance our product assortment, always with the consumer in mind. We also continue to focus on the execution of our growth strategy by adding 60 to 70 net new stores for the year, and on initiatives to increase store traffic and sales,” said president and CEO Neil Ross.
In a research note, Raymond James’ Kenric Tyghe said: “We believe that the outlook (and 10-per-cent dividend increase),are likely of greater reference than the miss, given both the noise in the sales performance (and investor focus on same-store sales trajectory - and the margin investment to drive it - through fiscal 2020). The F2020 outlook reflects comparable store sales growth in a range of 2.5 per cent-3.5 per cent (versus our 2.7-per-cent expectation), on a relatively modest investment (in our opinion) in the value proposition for gross margins of 38.0 per cent-39.0 per cent (versus F2019 of 39.3 per cent), SG&A margins of 14.25 per cent-14.75 per cent (versus F2019 of 14.4 per cent which was below guidance), for EBITDA margins of 23.25 per cent-24.75 per cent (versus 24.9 per cent). The imputed EBITDA (at the midpoint of guidance which we believe is conservative) of approximately $906-million, is below consensus of $948.9-million (at the upper end of guidance the imputed EBITDA is approximately $940-million)."
On the decline
Harvest One Cannabis Inc. (HVT-X) was down 3.9 per cent after announcing it has entered into an agreement, through it’s wholly-owned subsidiary Satipharm Ltd., to become a supplier to Health House International Pty Ltd.
Under the terms of the agreement, Harvest One will supply Health House with Satipharm CBD 50mg Gelpell capsules. The product will continue its availability in Australia, while expanding distribution to New Zealand and Asia where and when legal.
“This agreement with Health House increases the availability of our Satipharm CBD 50mg Gelpell capsules across Australia, while expanding Satipharm's medical cannabis distribution territories to New Zealand and Asia where and when legal" said Harvest One CEO Grant Froese. "We are committed to delivering the highest quality cannabinoid-based products globally. As further regions become available, we will endeavor to put agreements in place that will allow us to meet the needs of our patients."
CannTrust Holdings Inc. (TRST-T) plummeted 19 per cent after reporting a fourth-quarter loss of 26 cents a share, missing the Street’s expectation of a 4-cent loss.
Revenue of $16.2-million was an increase of 132 per cent year-over-year, but below the consensus expectation of $21.2-million.
"The CannTrust team has delivered remarkable growth in the fourth quarter of 2018. We achieved record sales volume, record revenue and our medical patient count continues to increase, reflecting the quality of our products and customer service," said CEO Peter Aceto in a release.
"We expect the trajectory of revenue growth to continue in 2019 as we bring additional capacity online through our Phase 2 expansion, realize the potential of investments we have made into training and crop yield optimization, implement targeted price increases and distribute our products to more and more consumers."
Organigram Holdings Inc. (OGI-X) dipped 1.9 per cent after announcing late Wednesday that it has exercised its right to convert its 6.0-per-cent unsecured debentures due Jan. 31, 2020 into common shares.
With files from staff and wires