A roundup of some of the North American equities making moves in both directions today
On the rise
Colliers International Group Inc. (CIGI-T) was higher after announcing its “Enterprise ‘25″ plan on Monday after the bell.
On Monday, the Toronto-based company revealed the five-year growth strategy, aiming to more than double its profitability with at least 65 per cent of adjusted EBITDA coming from recurring revenue by the end of 2025. Its targets include revenue of US$5.6-billion, adjusted EBITDA of US$830-million, and adjusted earnings per share of US$8.40.
“After doubling adjusted EBITDA between 2015 and 2020, we think most investors expected a similarly ambitious plan for 2020–25,”said RBC analyst Matt Logan. “What flies under the radar, in our view, is accelerating growth in recurring services, which have increased to 54 per cent of TTM EBITDA as at Q2/21, from 31 per cent in 2017. Looking ahead, we believe this continued evolution will underpin an upward rerating — particularly as recurring EBITDA reaches 65–70 per cent.”
See also: Tuesday’s analyst upgrades and downgrades
Shares of PrairieSky Royalty Ltd. (PSK-T) increased with the release of in-line third-quarter results and extension and expansion of its credit facility after the bell on Monday.
In a research note, Raymond James analyst Jeremy McCrea said: “”3Q21 results came in roughly in-line with expectations and were largely uneventful from a news flow perspective .. That said, we remain confident that a number of catalysts are on the horizon for PSK heading into year-end ... We expect the rising commodity price to drive a material uplift in activity on PSK’s lands leading to positive estimate revisions looking into 2022. This in combination with the encouraging results we continue to see in the Clearwater (especially the jump in activity quarter-over-quarter from this play – i.e., 7 to 51 wells). With sentiment and interest picking up, we think PSK’s share price continues to perform well heading into year-end.”
Shares of Mogo Inc. (MOGO-T) soared with the premarket launch of its “green” bitcoin on Tuesday.
The Vancouver-based digital payments and fintech firm called it the “world’s first climate-positive bitcoin” and said it’s an initiative which makes all bitcoin purchased on its platform climate positive.
“For every bitcoin purchased through its platform, Mogo will plant enough trees to completely offset the CO2 emissions produced by mining that bitcoin —and then some. This initiative, believed to be the first of its kind, also includes all bitcoin currently held by members on the platform. Mogo’s ‘green’ bitcoin further demonstrates the Company’s commitment to creating a healthier planet while empowering Canadians to invest and spend wisely,” it said.
Mogo said 421,000 pounds of carbon dioxide emissions are currently released into the atmosphere for each bitcoin currently mined.
“By launching ‘green’ bitcoin, we’ve made buying bitcoin good for the planet and arguably one of the most ESG-oriented investments anyone can make,” said CEO David Feller.
Betting firm DraftKings (DKNG-Q) jumped after it walked away from a US$22-billion offer to buy gambling group Entain on Tuesday, becoming the second American bidder to try and fail to take control of the British company.
Entain had already rejected a roughly US$11-billion takeover approach from U.S. casino operator MGM in January.
“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” DraftKings Chief Executive Officer Jason Robins said in a statement.
Entain, home to Ladbrokes and Coral betting shops as well as the bwin and partypoker online brands, said in response its board “strongly believes” in its future prospects as an independent company.
Entain shares fell 11 per cent on the London Stock Exchange, on course for their worst day since MGM dropped its takeover plans for the British firm.
When DraftKings unveiled its offer last month, MGM - which has a U.S. sports-betting joint venture with Entain - said that any deal in which Entain or its affiliates ends up owning a competing business would require its consent. MGM was not immediately available to comment on Tuesday.
Dealmaking in the betting industry has been heating up as the United States opens up to sports betting and companies look to expand into more developed gambling markets such as Britain.
London-listed Entain has enjoyed a boom in online gambling through the COVID-19 pandemic, with events such as last summer’s European soccer championship and the U.S. National Football League having helped to revive sports betting
General Electric Co. (GE-N) increased in the wake of announcing an upward revision to its full-year earnings forecast on Tuesday after reporting higher than expected third-quarter profit.
The Boston-based company now expects 2021 adjusted profit in the range of US$1.80 to US$2.10 per share compared with US$1.20 to US$2.00 per share estimated previously.
The industrial conglomerate, however, said it is facing a “challenging” operating environment including from global supply chain disruptions and onshore wind market pressure because of uncertainty over whether production tax credits will be extended over the long term in U.S. President Joe Biden’s infrastructure bill.
GE said it expects revenue growth, margin expansion, and higher free cash flow next year. However, it narrowed free cash flow estimates for 2021 to US$3.75-billion-US$4.75-billion from US$3.5-billion-US$5.0-billion forecast earlier.
Adjusted profit for the third quarter came in at 57 US cents a share. Analysts on average expected GE to report an adjusted profit of 43 US cents per share, according to Refinitiv data.
United Parcel Service Inc. (UPS-N) was up as it reported better-than-expected quarterly earnings and revenue on Tuesday, bolstered by strong e-commerce demand that has allowed the delivery firm to raise shipping prices and cherry-pick more profitable customers.
The company also raised its full-year adjusted operating margin target to about 13 per cent from about 12.7 per cent, ahead of the holiday season.
UPS and rival FedEx Corp are delivering record number of e-commerce packages amid labor shortages since COVID-19 shifted shopping online.
To beef up its delivery operations, UPS outlined plans last month to buy Roadie, a crowd-sourced, same-day delivery company whose major clients include home improvement chain Home Depot .
Revenue from UPS’ U.S. operations, its biggest segment, rose 7.4 per cent to US$14.21-billion.
The company’s third-quarter operating profit rose to about US$2.9-billion, or US$2.65 per share, in the third quarter ended Sept. 30, from US$2.36-billion, or US$2.24 per share, a year earlier.
On an adjusted basis, operating profit was US$2.71 per share, above the average analyst estimate of US$2.55, according to Refinitiv I/B/E/S data.
Revenue rose 9.2 per cent to US$23.18-billion, beating expectations of US$22.56-billion.
Hasbro Inc. (HAS-Q) rose despite saying on Tuesday global supply chain disruptions cost it about US$100-million in lost toy orders in the third quarter, and the company warned of a further hit to sales during the crucial holiday shopping season.
While demand has surged over the last year, factory shutdowns, a lack of container ships and long port delays have fueled fears of a shortage of toys to put under Christmas trees during the holiday season.
The maker of Transformers toys and Nerf blasters said the majority of the US$100-million in orders that were not filled in the third quarter had been delivered, and it was working “around the clock” to secure transport for its goods.
Hasbro said it expects 2021 revenue to rise 13 per cent to 16 per cent, compared with analysts’ estimates of a 14.2-per-cent rise, according to Refinitiv IBES estimates.
“We have orders to support the high end of the revenue growth range, but there are supply chain factors out of our control which could impact our ability to fully achieve the upside,” the company’s Chief Financial Officer Deborah Thomas said.
Last week, rival Mattel Inc raised its 2021 sales forecast, saying it was employing a number of strategies including pulling forward production and contracting more ocean freight capacity to ring in a strong holiday season.
Hasbro’s net revenue rose 11 per cent to US$1.97-billion in the third quarter ended Sept. 26, in line with estimates.
On an adjusted basis, the company earned US$1.96 per share, compared with estimates of US$1.69 per share.
Eli Lilly and Co (LLY-N) increased as it raised its full-year profit and revenue forecasts on Tuesday, citing expected higher sales of its COVID-19 antibody therapies, and the drugmaker said it has initiated a rolling submission for its experimental Alzheimer’s treatment.
Demand for Lilly’s COVID-19 antibody therapies, bamlanivimab and etesevimab, rose during the last three months as the spread of the Delta variant fueled a sharp rise in infections and hospitalizations in areas with low vaccination rates. The antibody treatments brought in US$217-million in the third quarter, up from US$149-million in the second quarter.
The U.S. government in September bought 388,000 additional doses of Lilly’s etesevimab, of which Lilly said it shipped about 250,000 doses in the three months ended Sept. 30.
The company said it now expected COVID-19 therapies to bring in about US$1.3-billion in sales in 2021, up from an earlier forecast of between US$1.0-billion and US$1.1-billion.
Lilly’s shares are up about 45 per cent so far this year, largely bolstered by bets it will land another blockbuster with a new Alzheimer’s drug that has yet to win regulatory approval.
But the stock is down about 12 per cent from a mid-August record high amid doubts over how well that drug will sell, price pressures faced by its top-selling drugs, and uncertainty over how new coronavirus variants and vaccinations will affect its COVID-19 therapy sales.
The Indianapolis-based group raised its forecast for this year’s adjusted earnings per share to between US$7.95 and US$8.05 from an earlier US$7.80 to US$8.00 range.
Excluding one-off items, Eli Lilly earned US$1.94 per share, missing analyst estimates of US$1.98 per share, on higher research and development expenses including those for the COVID-19 drugs.
On the decline
Shares of George Weston Ltd. (WN-T) were lower on Tuesday after it said on Tuesday it would sell its Weston Foods fresh and frozen bakery businesses to baking company FGF Brands Inc for $1.2-billion in cash.
The businesses comprised about 75 per cent of Weston Foods’ net sales in 2020.
The company put Weston Foods up for sale earlier this year as part of a plan to focus on its retail and real estate businesses.
George Weston says it remains committed to selling its remaining food business — comprised of cookies, cones, crackers and wafers.
The transaction is subject to regulatory approval and other closing conditions.
It is expected to close before the end of the first quarter of 2022.
The company says it expects to return the net proceeds from the sale to shareholders through share repurchases over time.
West Fraser Timber Co. Ltd. (WFG-T) was down after announcing it has signed a deal to buy Georgia Pacific’s oriented strand board mill near Allendale, S.C., for US$280-million.
The company says the mill will give it the flexibility to better meet customer demand, particularly in the southeastern U.S.
The mill, which began producing OSB in 2007, has been idle since late 2019.
It has an estimated stated capacity of approximately 760 million square feet.
West Fraser says it plans to spend an estimated US$7- million to upgrade and optimize the mill in preparation for its restart.
The mill is expected to employ approximately 135 people.
Facebook Inc. (FB-Q) slipped even as the social media giant warned that Apple Inc’s new privacy changes would weigh on its digital business in the current quarter. The company announced $50 billion in share buybacks, while posting a 17-per-cent rise in third-quarter profit.
The company also said late Monday it will start publishing the financial results of its augmented and virtual reality labs as a separate unit, where it is investing billions in its ambitions to build the “metaverse” and as it reported that its main advertising business faces “significant uncertainty.”
David Wehner, Facebook’s chief financial officer, said the company expected its investment in its hardware division, Facebook Reality Labs, to reduce overall operating profit in 2021 by approximately US$10-billion.
The financial commitment to this hardware-focused unit which will work on Facebook’s “metaverse” ambitions, comes as the company is swamped by coverage of documents leaked by former Facebook employee and whistleblower Frances Haugen which she said showed the company chose profit over user safety. CEO Mark Zuckerberg started Monday’s analyst call by issuing a defense against criticisms stemming from the documents, which he said painted a “false picture of our company.”
The CEO has said Facebook in the coming years will be seen not as a social media firm but as a company focused on the metaverse. The buzzy term refers broadly to a shared virtual environment which can be accessed by people using different devices.
See also: Feds have chance to protect Canadians from digital platform harms, experts say
3M Co. (MMM-N) finished just lower despite cutting its full-year earnings forecast on Tuesday, as the diversified manufacturer battles rising inflation, supply chain bottlenecks and higher commodity prices.
While demand for goods has rebounded with massive stimulus and the reopening of economies, a labour shortage and soaring raw material prices have left U.S. manufacturers in the lurch.
Shares of 3M rose as the biggest maker of N95 masks reported a better-than-expected quarterly profit and revenue on the back of sales growth in all its businesses.
3M, which makes everything from Post-It notes and adhesives to industrial sandpaper, also said annual sales are now expected to grow between 9 per cent and 10 per cent, compared to a prior forecast of 7 per cent to 10 per cent.
Last month, the company pointed to inflation coming in higher than expected, with cost pressures in resins, wood pulp and labor.
3M now expects 2021 earnings per share between US$9.70 and US$9.90, versus its earlier forecast range of US$9.70 to US$10.10.
Third-quarter sales in the company’s safety and industrial unit grew 7.2 per cent to US$3.24-billion, while that of its consumer unit grew 8.1 per cent to US$1.53-billion.
Net income attributable to 3M rose marginally to US$1.434-billion, or US$2.45 per share, in the quarter ended Sept. 30.
Analysts on average expected the company to earn US$2.20 per share, according to Refinitiv data.
Net sales rose 7.1 per cent to US$8.94-billion, beating estimates of US$8.67-billion.
David Leeder