A roundup of some of the North American equities making moves in both directions today
On the rise
Canadian Utilities Ltd. (CU-T) was up 2.9 per cent after announcing its newly formed 50/50 joint venture with Quanta Services Inc. (PWR-N) and Luma Energy LLC has been selected by the Puerto Rico Public-Private Partnerships Authority to modernize and operate the country’s electric transmission & distribution (T&D) system under a 15-year contract.
In a research note, Industrial Alliance Securities analyst Elias Foscolos said: “The contract win for the 15-year modernization and operation of Puerto Rico’s T&D system speaks to CU’s scale and operational expertise. The contract will provide CU with a) increased geographic diversification in accordance with the Company’s strategy and b) long-term cash flows and earnings accretion with performance-based upside, with c) no capital investment, essentially replacing the loss of earnings from the disposed of power assets.”
Amazon shares (AMZN-Q) were up 1.8 per cent after it said on Tuesday it will launch a US$2-billion venture capital fund that will focus on technology investments to reduce the impact of climate change and support sustainable development.
The Climate Pledge Fund will invest in companies across industries such as transportation and logistics, energy, storage and utilization, manufacturing and materials, and food and agriculture, the e-commerce giant said.
Amazon, which delivers about 10 billion items a year and has a massive transportation and data center footprint, has faced protests from environmental activists and pressure from its employees to take action on climate change.
The company has vowed to be net carbon neutral by 2040.
“Each prospective investment will be judged on its potential to accelerate the path to zero carbon and help protect the planet for future generations,” Chief Executive Officer Jeff Bezos said in a statement.
Translate Bio Inc. (TBIO-Q) soared 46.9 per cent on plans to expand a vaccine collaboration with Sanofi in a deal that could earn the U.S. biotech company more than US$2-billion from the French drugmaker.
The deal strengthens Sanofi’s credentials in a market engaged in a frantic race to find a safe and effective vaccine against the coronavirus disease that has killed more than 472,000 worldwide.
The companies said they would expand their partnership to develop a wide range of mRNA vaccines. The mRNA (messenger ribonucleic acid) technology, an area of Translate Bio expertise, instructs human cells to make specific proteins that produce an immune response to a disease.
The deal will give Sanofi about 7.2 per cent of Translate Bio and exclusive worldwide rights to develop, manufacture and sell infectious disease vaccines using the U.S. company’s technology.
Mastercard Inc. (MA-N) was up 0.8 per cent after it said on Tuesday it would buy Finicity in a deal valued at US$825-million, adding a fintech firm that helps banks share customer data with other financial firms.
The world’s second-largest payments processor also said Finicity’s existing shareholders can get an earn-out of up to an additional US$160-million, if performance targets are met.
Finicity will help Mastercard strengthen its open banking services, which allow customers to determine how and where third parties such as fintechs or other banks can access information to initiate payments on their behalf or provide money management services.
On the decline
Aurora Cannabis Inc. (ACB-T) lost 0.8 per cent on Tuesday after announcing it’s making its second round of significant cuts this year as it continues with a restructuring plan meant to address profitability struggles.
The Edmonton-based cannabis company said it will reduce its selling, general and administrative workforce by 25 per cent immediately and another 30 per cent of production staff will be laid off from the company over the next two quarters.
“This has not simply been a cost cutting exercise,” said Michael Singer, Aurora’s executive chairman and interim chief executive.
“We have undertaken a strategic realignment of our operations to protect Aurora’s position as a leader in key global cannabinoid markets, most notably Canada.”
On top of layoffs, Aurora has also decided to cease some operations at five facilities — Aurora Prairie in Saskatchewan, Aurora Mountain in Alberta, Aurora Ridge in Ontario and Aurora Vie and Aurora Eau in Quebec — over the next two quarters.
Part of Aurora Vie will remain operational to allow for the manufacturing of certain higher margin items, in line with the company’s decision to focus production and manufacturing at the company’s larger scale and more efficient sites.
Canaccord Genuity Doug Taylor said: “The financings bring the total liquidity raised year-to-date to $5.5-billion, and the company added the statement that it expects to close Q2 with at least $9-billion in liquidity. Given the Q1 liquidity of $6.5-billion and the transactions announced since, the math suggests that the cash burn for the quarter was a maximum of $1.95-billion and likely less given fees paid with these transactions, rounding, etc. We find this broadly consistent with the expectation of $20-million per day in cash burn discussed with Q1 results (implying a $1.82-billion burn for the quarter). The company also easily met its goal of exiting the quarter with more liquidity than it entered with. We maintain a BUY rating with a $25 target.”
The mega pipeline deal is the world’s single largest energy infrastructure investment this year, CEO Sultan al-Jaber said in a phone interview.
A consortium of Brookfield, Global Infrastructure Partners (GIP), Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, NH Investment & Securities and Italy’s Snam will invest in select ADNOC gas pipeline assets valued at US$20.7-billion, ADNOC said.
Shares of Beyond Meat Inc. (BYND-Q) were down 4.2 per cent after Starbucks Inc. (SBUX-Q) announced its new Impossible Breakfast Sandwich, made by rival Impossible Foods Inc., was available as part of its new summer menu.
Starbucks was up 0.1 per cent.
Spirit AeroSystems Holdings Inc. (SPR-N), Boeing Co.‘s (BA-N) top supplier, slipped 13.3 per cent as it said it was seeking relief from lenders as its finances were stretched by the COVID-19 pandemic and a 737 MAX production halt.
Boeing has asked the aero parts maker to substantially reduce 737 production this year, and Spirit warned that further suspensions or cuts may have a “material adverse” effect on its financial condition.
The company said it now expects to deliver only 72 shipsets - or complete sets of parts - to Boeing, compared with 125 planned earlier.
“Given the substantial production plan reduction, Spirit could breach the financial covenants under its credit agreement in the fourth quarter of 2020 without an amendment or waiver,” the company said in a regulatory filing.
A Boeing spokesman said the U.S. planemaker was working closely with Spirit to adjust delivery schedules and production rate profiles as appropriate.
Luckin Coffee Inc. (LK-Q) disclosed on Tuesday that it received a de-listing notice from the Nasdaq Inc last week after it failed to file its annual report, sending the shares of the Chinese coffee chain down about 12.3 per cent.
This is the second notice from the U.S. stock exchange. The previous one was issued in May, after the company announced a probe saying that a top executive fabricated and overestimated as much as 2.2 billion yuan (US$311.5-million) in 2019 sales.
The latest reason cited by the Nasdaq is in addition to the two bases disclosed last month - public concerns raised by the fabricated transactions and the company’s failure to disclose material information.
The Chinese company, which competes with U.S. coffeehouse Starbucks, said the failure to file its annual report was due to delays caused by the COVID-19 pandemic and as it awaits the result of the internal probe.
Micron Technology Inc. (MU-Q) slid 2.6 per cent after an equity analyst at BMO Nesbitt Burns downgraded its stock.
“From levels close to book value for the shares, where we saw an opportunity for an out-sized return vs. limited downside, bask-stopped by book value, for a thesis based on positive FCF through the downturn, we now see the risk/reward as a lot more balanced,” said Ambrish Srivastava.
American Airlines Group Inc. (AAL-Q) dropped 6.2 per cent after it said on Tuesday it expects to raise about US$2-billion through a stock-and-notes offering in an effort to bolster its balance sheet to better deal with a slowdown in travel due to the COVID-19 crisis.
The company plans to offer 74.1 million shares of its common stock priced at US$13.50 per share, representing a 15.6-per-cent discount to Friday’s close, the last trading day before the company announced its plan to secure $3.5 billion in new financing.
American also said it would offer US$1-billion in convertible senior notes with 6.5-per-cent coupon rate due 2025 in public offerings.
With files from staff and wires