A survey of North American equities heading in both directions
On the rise
Maple Leaf Foods (MFI-T) closed up 0.4 per cent after announcing it is closing its aging poultry plant in Brantford, Ont. and consolidating its production into its existing network through early next year.
The company says earlier this year, it determined that the 100-year-old facility would likely need significant ongoing investment to continue operating long-term.
Maple Leaf says most of its Further Processed Poultry production will be consolidated into its existing plant network.
President and CEO Curtis Frank says it was a decision the company took seriously.
He says the plant closure will happen in a phased manner to maintain business continuity and meet customer demand.
The company will work with affected employees to support them, including through opportunities at other Maple Leaf facilities.
Lightspeed Commerce Inc. (LSPD-T) rose 0.8 per cent in response to signing a North American partnership deal with Uber (UBER-N).
to integrate Uber Direct and Uber Eats marketplace into its platform.
The Montreal-based payments technology firm says the built-in integrations will allow Lightspeed merchants to list menu offerings and take orders from the Uber Eats marketplace.
They will also be able to take orders from their own websites through Lightspeed’s order anywhere system and then use Uber Direct for the delivery.
Uber Direct is Uber’s white-label delivery facilitation service.
The company says it will allow merchants to pay only the associated delivery fee instead of the cost of developing their own delivery fleet.
Lightspeed president JD Saint-Martin says the company believes the agreement is only the first step in a long-term relationship with Uber.
Shares of Nvidia (NVDA-Q) surged over 9 per cent on Thursday after the chipmaker forecast an upbeat second-quarter revenue and announced a stock split that floored investors and once again showcased its dominance in the AI-related chips market.
Rival AI-related chipmakers Advanced Micro Devices (AMD-Q), Broadcom (AVGO-Q) and Micron Technology (MU-Q) had mixed reactions.
The poster child of AI chips forecast fiscal second-quarter revenue of US$28-billion, plus or minus 2 per cent, with analysts on average expecting revenue of US$26.66-billion, according to LSEG data.
Already the world’s third-most valuable firm, Nvidia was set to add US$210-billion to its market value of US$2.335-trillion. Its shares rose above US$1,000 and a close above that level would mark a major milestone for the company whose stock has rallied more than 90 per cent this year after more than tripling in 2023.
If it closes above US$1,000 on Thursday, it would mark the first time Nvidia’s stock has climbed above that psychologically important threshold.
“The stock price will certainly reach $1,000 per share, but whether it can maintain that level is uncertain,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Nvidia also said it would split its stock ten-for-one, effective June 7, and raised its quarterly dividend by 150 per cent on a post-split basis.
The Santa Clara, California-based company’s chips are the gold standard in artificial intelligence and its results are widely seen as a barometer for the burgeoning AI industry, whose evolution has stoked investor enthusiasm and helped drive the bull run in U.S. stocks.
“You can’t help feeling Nvidia left a lot of gas in their tank to beat and raise from here,” Melius Research analyst Ben Reitzes wrote in a note, citing revenue from its Blackwell chip products and demand for other new chips.
Nvidia continued to flag demand was exceeding supply but CEO Jensen Huang said their upcoming Blackwell AI chips will ship in the current quarter, with production increasing in the following quarter.
“Given Nvidia’s astronomical growth, we continue to assess the risk of companies buying too many AI GPUs too soon, leading to an air pocket and excess inventory at some point in the future. We see no such signs today,” Morningstar analysts wrote in a note.
Brokerages Bernstein and Jefferies also said fears of an “air pocket” in the near term should likely mellow.
At least 10 brokerages raised their price targets (PTs) on the stock - Rosenblatt Securities and Cantor Fitzgerald have the highest PT of US$1,400 among 58 analysts covering the firm, according to LSEG data.
U.S.-listed shares of Taiwanese contract chipmaker TSMC (TSM-N), a major supplier to Apple and Nvidia, was up 0.5 per cent after forecasting an annual revenue growth of 10 per cent in the global semiconductor industry, excluding memory chips.
“This is a new golden age of opportunity with AI,” said senior vice-president Cliff Hou, who was speaking at an event in Hsinchu, where the company is headquartered.
In April, TSMC lowered its outlook for the global semiconductor industry excluding memory to a growth rate of around 10 per cent from a previous forecast of more than 10 per cent.
World Semiconductor Trade Statistics has forecast growth of 13.1 per cent for the global semiconductor market in 2024.
TSMC has estimated second-quarter sales may rise as much as 30 per cent as it rides a wave of demand for semiconductors used in artificial intelligence applications (AI).
Ralph Lauren (RL-N) on Thursday forecast annual revenue growth below market expectations and named insider Justin Picicci as its chief financial officer, effective immediately.
The apparel maker’s shares, which have risen about 16 per cent so far this year, gained an additional 3.3 per cent despite the company also forecasting current-quarter revenue growth below estimates.
Demand for pricier apparel in the United States has been choppy as consumers become increasingly particular about quality, style and value on their stressed discretionary budgets.
Ralph Lauren, much like its peers in the apparel space, resorted to promotions in markets like the United States in order to appeal to a more price-sensitive lower-income consumer.
The company expects annual revenue to rise in low-single digits, centering on about 2 per cent to 3 per cent, below market expectations of a 3.98-per-cent increase to US$6.89-billion, as per LSEG data.
Ralph Lauren’s wholesale business has come under pressure in the United States as retailers and department stores limit orders while they face the brunt of weak demand from a cautious consumer.
Wholesale revenue in Ralph Lauren’s biggest market, North America, fell 2 per cent in the quarter following a 15-per-cent fall in the prior quarter.
“We continue to evaluate our brand presence on a door-by-door basis, resulting in approximately 20 department store exits completed in the region (North America) this fiscal year,” the company said.
It also forecast first-quarter revenue to rise slightly, against expectations of a 2.82-per-cent increase to US$1.54-billion.
However, the company’s fourth-quarter revenue of US$1.57-billion edged past estimates of US$1.56-billion, benefiting from robust demand in its direct-to-consumer channel in Europe and Asia.
On the decline
Shares of Toronto-Dominion Bank (TD-T) were lower by 1.6 per cent on Thursday after its second-quarter profit beat analysts’ estimates on a boost in capital markets even as profit fell 22 per cent from the same quarter last year, weighed down by costs related to the U.S. investigation into the lender’s anti-money laundering practices.
TD earned $2.56-billion, or $1.35 per share, in the three months that ended April 30. That compared with $3.31-billion, or $1.69 per share, in the same quarter last year.
Adjusted to exclude certain items, including restructuring costs and a US$450-million provision to cover penalties it’s facing as a result of a lengthy U.S. regulatory and law enforcement investigation, the bank said it earned $2.04 per share. That edged out the $1.85 per share analysts expected, according to S&P Capital IQ.
“We delivered significant positive operating leverage while continuing to invest in our business, including our risk and control infrastructure,” TD chief executive officer Bharat Masrani said in a statement.
TD expects to incur fines or other penalties stemming from probes by the U.S. Department of Justice and other agencies related to its anti-money-laundering practices. The discussions with three U.S. regulators and the Department of Justice are ongoing, and the bank anticipates further penalties.
“The bank has been co-operating with U.S. regulators and authorities in good faith for many months and is working diligently to bring these investigations to resolution so that investors can have more clarity,” TD said in a press release. “A comprehensive overhaul of TD’s U.S. AML program is well underway, and will strengthen our program globally.”
Separately, The Globe reported Wednesday that Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, identified deficiencies with TD’s regulatory compliance management program during a recent assessment.
Scotiabank analyst Meny Grauman said that TD’s second-quarter results were a “a big beat with a big asterisk.”
The results that beat analyst expectations by a wide margin “sounds like a very positive result for any bank let alone one that has underperformed the peer group so dramatically over the past few months,” Mr. Grauman said in a note to clients. “And yet we label this quarter as mixed given both the source of the beat, and of course the elephant in the room which remains TD’s ongoing AML issues in the US – on which we got no new information (as we had expected).”
- Stefanie Marotta
Shares of Ticketmaster owner Live Nation (LYV-N) dropped 7.8 per cent after the U.S. Justice Department filed a sweeping antitrust lawsuit on Thursday, accusing them of running an illegal monopoly over live events in America — squelching competition and driving up prices for fans.
The lawsuit, filed in federal court in Manhattan, was being brought with 30 state and district attorneys general and seeks to break up the monopoly they say is squeezing out smaller promoters and hurting artists.
“We allege that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the United States at the cost of fans, artists, smaller promoters, and venue operators,” Attorney General Merrick Garland said in a statement. “The result is that fans pay more in fees, artists have fewer opportunities to play concerts, smaller promoters get squeezed out, and venues have fewer real choices for ticketing services. It is time to break up Live Nation-Ticketmaster.”
The Justice Department accuses Live Nation of a slew of practices that allow it to maintain a stronghold over the live music scene, including using long-term contracts to keep venues from choosing rival ticketers, blocking venues from using multiple ticket sellers and threatening venues that they could lose money and fans if they don’t choose Ticketmaster. The Justice Department says Live Nation also threatened to retaliate against one firm if it didn’t stop a subsidiary from competing for artist promotion contracts.
Live Nation has denied that it engages in practices that violate antitrust laws. When it was reported that the company was under federal investigation in 2022, the concert promoter said in a statement that Ticketmaster enjoys a such a large share of the market because of “the large gap that exists between the quality of the Ticketmaster system and the next best primary ticketing system.”
But competitor ticket sellers have long complained that Live Nation makes it difficult for them to disrupt the market with practices such as withholding acts if those venues don’t agree to use Ticketmaster’s service.
DuPont (DD-N) slid after it said late Wednesday it will split into three publicly traded companies as it joins a slew of U.S. conglomerates looking to unlock value and pursue focused growth.
The company will separate its electronics and water businesses in tax-free transactions, while the new DuPont will continue as a diversified industrial company.
DuPont also named CFO Lori Koch as CEO from June 1 as the current top boss Ed Breen becomes executive chairman to join the board.
The company expects to complete the split in 18 to 24 months and before that it will announce the executive leadership of the separate companies.
”Each company will have greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A,” said outgoing CEO Ed Breen.
Back in 2015, DuPont and Dow had agreed to merge for US$130-billion, in which the two companies then split into three.
DowDuPont in 2017 spun off its chemical businesses as Dow and its agribusiness division into Corteva, with DuPont remaining on as the company it is today.
The new DuPont will house the existing businesses within its water and protection segment, industrial solutions and end-markets in healthcare like medical packaging.
These businesses generated net sales of nearly US$6.6-billion in 2023.
The electronics company would mainly include the existing semiconductor technologies and interconnect solutions, while the water company will comprise of DuPont’s water solutions business.
DuPont said the liabilities tied to per- and polyfluoroalkyl substances, or PFAS (dubbed forever chemicals) and other indemnity obligations to Corteva under the 2019 spin-off agreements would be allocated among the three companies on a pro-rata basis.
Tesla (TSLA-Q) dropped 3.5 per cent on news its latest impact report published on Thursday does not include its previously laid down target to deliver 20 million vehicles a year by 2030, another sign it was scaling back its ambitions as an automaker amid a pivot to robotaxis.
CEO Elon Musk last month said that Tesla would use current product lines for new affordable vehicles, as it retreated from more ambitious plans to produce an all-new model that had been expected to cost $25,000.
He had said in 2020 that Tesla aspired to sell 20 million vehicles by the end of the decade – twice as many as the world’s largest automaker, Toyota, sells today.
Data cloud analytics firm Snowflake (SNOW-N) on Wednesday forecast second-quarter product revenue above Wall Street estimates and raised its expectations for the year, on strong demand for its cloud-based services amid a surge in use of generative artificial intelligence.
Shares slipped over 5 per cent as the data cloud analytics company also said it plans to acquire technology assets and hire 35 employees from TruEra, an AI observability platform. It did not share further details.
“Our core business is very strong. Our AI products, now generally available, are generating strong customer interest. They will help our customers deliver effective and efficient AI-powered experiences faster than ever,” CEO Sridhar Ramaswamy said.
The company had in April launched Snowflake Arctic, a large language model that draws from massive amounts of text to generate responses to queries and is optimized for complex enterprise workloads.
Companies are increasingly moving from traditional to cloud-based solutions, looking to integrate digital and more cost-effective processes since the pandemic, benefiting cloud-related services firms such as Snowflake.
“Snowflake results exceeded expectations and guidance was strong as well as the company benefits from an accelerated shift to the cloud and Generative AI volumes,” said D.A. Davidson analyst Gil Luria.
The company forecast product revenue in the range of US$805-million to US$810-million for the second quarter, above analysts’ average estimate of US$785-million, according to LSEG data.
For 2025, Snowflake expects product revenue at US$3.30-billion, up from a prior forecast of US$3.25-billion.
For the first quarter ended April 30, Snowflake posted a 34-per-cent rise in product revenue to US$789.6-million, beating expectations of US$747.9-million. Total revenue came in at US$828.7-million.
With files from staff and wires
David Leeder