A survey of North American equities heading in both directions
On the rise
TSX-listed shares of Nutrien Ltd. (NTR-T) were higher by 3.5 per cent despite saying an employee died Sunday at a potash mine in Saskatchewan, temporarily shuttering the operation as the company conducts an investigation.
The death took place at the railcar-loading facility at Nutrien’s mine near the town of Rocanville, about 250 kilometres east of Regina.
Potash is a primary ingredient in agricultural fertilizers.
In a statement the company said it is conducting an internal investigation and is cooperating with authorities.
“Our current focus is on ensuring we have support services available to all those involved,” the statement said, adding that the company is “unlikely to have further details until the completion of internal and external investigations.”
Macy’s shares (M-N) closed up 5.1 per cent in volatile trading on Tuesday after it raised its profit forecast for the year on Tuesday, as its new CEO’s turnaround plan helped to shield the department store chain from falling sales due to a cautious consumer.
Under CEO Tony Spring, who took charge in February, Macy’s has outlined a two-year investment and turnaround plan to save US$100-million in costs this year by shuttering about 150 stores through 2026.
Macy’s said on Tuesday it expects its full-year adjusted earnings in the range of US$2.55 to US$2.90 per share. It had earlier forecast earnings of US$2.45 to US$2.85 per share.
The company is opening 15 locations for its Bloomingdale’s and at least 30 new Bluemercury cosmetics stores. Both chains have outperformed many of its Macy’s department store locations.
“I’m kind of impressed with Macy’s hanging in here and giving good guidance. So it remains to be seen if it can come through,” said Don Nesbitt, senior portfolio manager at F/m Investments. Nesbitt’s firm holds a stake in Macy’s.
The department store chain is in buyout talks with activist investor Arkhouse Management in a deal valuing it at US$6.6-billion. Last month, Macy’s added two of Arkhouse’s nominees to its board after the investor nominated nine director-candidates to the company’s board in February.
Although Macy’s overall selling, general and administrative expenses fell to US$1.9-billion, a US$39-million decrease compared to the year-ago period, its executives have struggled to find the right mix of merchandise for its Macy’s stores.
On Tuesday, Macy’s said it expects shoppers generally would continue to be discerning in their discretionary purchases.
Discounts that Macy’s put in place on slow-moving clothing for warm weather pushed its gross margin to 39.2 per cent from 40 per cent a year earlier.
Macy’s expects fiscal 2024 net sales of between US$22.3-billion and US$22.9-billion, compared to its prior forecast of US$22.2-billion to US$22.9-billion.
Excluding items, first-quarter adjusted profit came in at 27 US cents per share, topping LSEG estimates of 15 US cents.
Lam Research’s (LRCX-Q) board has approved a 10-for-1 stock split and share buyback worth up to US$10-billion, the chip-making equipment firm said on Tuesday, amid signs that its business was benefiting from the AI-fueled jump in semiconductor demand.
Shares of the company gained 2.3 per cent after the announcement made during the premarket hours.
The share repurchase “is consistent with our plan to return 75 per cent to 100 per cent of free cash flow to stockholders in the form of dividends and share buybacks,” CFO Doug Bettinger said.
The stock split is expected to be effective after the market close on Oct. 2, the company said.
The company last month beat Wall Street estimates for quarterly revenue, as chipmakers ordered more of its equipment used to manufacture semiconductors for artificial intelligence applications.
On the decline
Palo Alto Networks (PANW-Q) shares fell almost 4 per cent on Tuesday after a largely in-line fourth-quarter billings forecast indicated the near-term impact of the cybersecurity firm’s attempts to consolidate its services under a single platform.
The company is betting on its “platformization” strategy to drive growth. However, that drove an increase in bookings with payments deferred over the term of the purchase instead of upfront, as clients grappled with higher borrowing costs, a trend Palo Alto expects will continue.
The company projected fourth-quarter billings to be between US$3.43-billion and US$3.48-billion, the mid-point of which was largely in line with LSEG estimate of US$3.45-billion.
“Clearly investors had been hopeful for more, as the stock price crept up since early April in anticipation of earnings,” analysts at Bernstein said in a client note.
Palo Alto’s shares had gained about 11 per cent this month through Monday’s close.
Still, analysts remained optimistic as new AI products and a deal with IBM to deliver AI-powered security are expected to accelerate performance at the company.
“We continue to believe the company remains well-positioned to consolidate security spend and to maintain above-peer growth,” analysts at RBC Capital Markets said
Lowe’s Cos (LOW-N) reported a lower-than-expected drop in quarterly sales on Tuesday, helped by more small-scale repairs undertaken by inflation-hit Americans, who have otherwise cut back on big-ticket discretionary home improvement projects.
The North Carolina-based company’s shares slid 1.8 per cent despite Lowe’s reaffirming its annual sales and profit target.
Rival Home Depot (HD-N) last week reiterated its annual targets hoping that demand would recover in the second half.
“Expectations for Lowe’s were a little bit lower (after Home Depot’s results) and people thought it may have a chance to miss earnings but instead they were actually able to beat,” said Telsey Advisory Group’s Joe Feldman.
While higher prices of essentials has made customers wary about undertaking expensive repairs, they have been willing to shell out on smaller repair works, helping prop up sales at home-improvement retailers.
Lowe’s has also been able to sustain demand from its pro-customers, which include professional builders, contractors and handymen, helping it counter the weakness from its do-it-yourself customers, who have cut back spending on home decor categories.
Visits to Lowe’s were also up by 0.2 per cent on a year-over-year basis in April, having dropped 1.1 per cent in March and 2.8 per cent in February, according to data analytics firm Placer.ai.
It said the launch of its DIY loyalty program nationally during the quarter to attract more customers as well as expansion of its same-day delivery options helped it take market share in key categories.
Same-store sales at Lowe’s fell 4.1 per cent, compared to estimates of a 5.65-per-cent decline.
“Lowe’s went from what looked like an earlier quarter ‘miss’ to modest upside given a late quarter surge as spring started to break in different parts of the country,” said Truist Securities analyst Scot Ciccarelli.
The home improvement chain earned US$3.06 per share for the quarter ended May 3. Analysts on average had expected a profit of US$2.94, according to LSEG data.
Peloton Interactive (PTON-Q) fell 16.4 per cent as the fitness equipment maker said late Monday it was looking to refinance its debt, as the fitness equipment maker seeks to regain its footing amid falling sales due to uncertain demand.
The company said it will sell US$275-million of convertible senior notes due 2029 in a private offering.
Convertible notes - bonds that can turn into shares at pre-agreed prices - usually pay a lower rate of interest than typical bonds and can ease the debt burden on a company.
Peloton has not determined the interest it will pay on the notes, but has decided that the payments would be made semi-annually, it said.
The company has also entered into a US$1-billion five-year term loan facility and a US$100-million five-year revolving credit, it added.
Proceeds would be used to repurchase about US$800-million of convertible senior notes due 2026 and to refinance its existing term loan, the company said.
Earlier this month, Peloton CEO Barry McCarthy, who was tasked in early 2022 to stem the slide in sales from the pandemic highs, quit as the company announced job cuts to reduce costs after posting weak results.
A number of private equity firms have been considering a buyout of the company, according to a report earlier this month.
Zoom Video Communications (ZM-Q) turned lower and closed down 0.4 per cent after it raised its annual forecast for profit and revenue, helped by robust demand for its product portfolio as companies continue to adopt hybrid work.
The upbeat outlook indicated that Zoom’s efforts to incorporate artificial intelligence (AI) and broaden its range of services have been successful.
It introduced Zoom Workplace, an AI powered, open collaboration platform in March, along with new AI companion expansions, first unveiled in September last year, for paid users.
Zoom, along with platforms like Microsoft’s Teams and Cisco’s Webex are pandemic darlings, which most businesses and individuals turned to, for connecting with employees and friends.
“In Q1, we continued to integrate AI across our platform including Zoom Contact Center and Zoom Workplace, our AI-powered collaboration platform,” CEO Eric Yuan said.
The company now expects 2025 revenue of about US$4.61-billion to US$4.62-billion, up from its earlier forecast of about US$4.6-billion. Analysts expect revenue of US$4.61-billion, according to LSEG data.
On an adjusted basis, it expects full-year earnings between US$4.99 and US$5.02 per share, compared with its previous forecast of between US$4.85 and US$4.88.
For the second quarter, Zoom sees revenue between US$1.145-billion and US$1.150-billion, slightly below analysts’ average estimate of US$1.15-billion.
The company posted revenue of US$1.14-billion, up 3.2 per cent, for the first quarter ended April 30 and above analysts’ expectations of $1.13 billion.
Zoom reported quarterly adjusted earnings of US$1.35 per share, also above estimates of US$1.20.
U.S.-listed shares of Li Auto (LI-Q) lost 3.5 per cent after the Chinese firm postponed plans to launch pure electric SUV models to next year.
The decision comes as Li Auto, which has built its profits and success on four extended-range gas electric hybrid models, has also encountered a setback with its first fully electric model Mega that didn’t meet its original expectation of sales.
“Enough charging stations and enough incremental display spots (in our retail shops) are two critical and necessary conditions for selling our BEV SUV product,” chief executive Li Xiang told an earnings call late on Monday, referring to battery-powered EVs.
Li Auto had previously planned to unveil three electric SUVs this year and Li said his nine-year-old company wouldn’t launch any electric SUV model until the first half of next year.
Li Auto had pinned its hopes on the Mega MPV that touts a streamlined bullet-style shape to outsell any model priced above 500,000 yuan (US$69,000) in China. The company delivered more than 3,000 units of Mega in March, while analysts had expected monthly sales of 8,000 units.
“The company has lowered its priority for 2024 profitability but has been focusing on laying a more solid foundation for BEV’s success after the wrong expectation on the Mega,” China Merchants Bank International analyst Shi Ji said in a note.
With files from staff and wires
David Leeder