A roundup of some of the North American equities making moves in both directions today
On the rise
Nutrien Ltd. (NTR-T) gained 1.8 per cent on Wednesday despite reporting a smaller-than-expected quarterly profit and forecast full-year earnings below analysts’ estimates on weak global demand for fertilizers and lower potash prices.
After the bell on Tuesday, Nutrien said it expects adjusted earnings of $1.90 per share to $2.60 per share, below analysts’ expectations of $2.73 per share.
Demand for fertilizers has been hit by a combination of factors including the impact of a drawn-out U.S.-China trade war and an extremely cold winter in North America that has delayed planting.
That had forced Nutrien to substantially cut back on potash production and extend the shutdown of its Vanscoy mine in Canada through the end of January.
The company, however, said the recent progress in trade relations between the world’s two largest economies has led to positive sentiment among U.S. growers as agricultural exports to China are expected to improve significantly both in the short and medium term.
The company reported a net loss from continuing operations of $48 million, or 8 cents per share, in the fourth quarter ended Dec. 31, compared with a profit of $296 million, or 48 cents per share, a year earlier.
Excluding items, the company earned 9 cents per share, missing profit expectations of 26 cents per share, according to IBES data from Refinitiv.
Hudbay Minerals Inc. (HBM-T) gained almost 4 per cent on the heels of announcing that the community of Chilloroya has formally approved a surface rights agreement with the company for the Pampacancha satellite deposit located near the Constancia mine in Peru. With the completion of this agreement, the company said it expects to be mining ore from the deposit in late 2020.
The company also said it expects growth capital expenditures associated with project development and acquiring the surface rights for Pampacancha to be approximately $70-million in 2020. “In accordance with Peru’s Consulta Previa law, additional consultation between the Peruvian government and the local community is required before Hudbay can begin development activities,” it stated.
In a research note, Industrial Alliance Securities analyst George Topping said: “While the deal took a long time to hammer out, it will have a knock-on effect as management negotiates rights in the future with other communities in the region at additional satellite deposits all within trucking distance of the main Constancia pit. The formal agreement also marks a quick win for new CEO Peter Kukielski, as he is tasked with building value back up into the stock post Rosemont. The surface rights could mark a turning point in the stock, which trades at a 64-per-cent discount to NAV. The next catalyst will be an updated resource at Lalor in Manitoba which is expected to increase the LOM, incorporate the recent discoveries at the 1901 zone, and add to the gold upside of the polymetallic deposit.”
Stelco Holdings Inc. (STLC-T) rose almost 6 per cent despite saying it swung to a loss in its fourth quarter after challenging market conditions including an “unprecedented” drop in prices.
The Hamilton-based steel producer says it lost $24 million or 27 cents per diluted share for the quarter ended Dec. 31, compared with net income of $110 million or $1.23 per diluted for final quarter of 2018.
National Bank analyst Maxim Sytchev said: “Pricing stabilization is constructive but EPS trajectory is still negative. This is the third quarter in a row that STLC printed an EPS loss. Given scheduled CAPEX plans, we expect FCF to remain negative in 2020E. Even with a much anticipated (but somewhat diluted) U.S./China trade truce, we are still not seeing robust end-market demand. With FCF under pressure (hence minimizing accretive M&A prospects), we are still looking for a clear catalyst for the stock. Shares trading at 4.2 times 2021 EV/EBITDA is attractive in a normal course of business but a fair value in our view given lukewarm pricing environment and uncertainties around timing / execution of CAPEX projects."
Shale producers Concho Resources Inc. (CXO-N) and Devon Energy Corp. (DVN-N) were up 7.6 per cent and 2.6 per cent, respectively, a day after announcing they are reining in spending plans for the year as investors try to save cash in the backdrop of weak oil and gas prices.
U.S. oil producers have been under pressure from investors to cut back on drilling new wells and instead use the cash for dividends and buybacks.
On Tuesday after the bell, Concho lowered its 2020 capital expenditure to between US$2.6-billion and US$2.8-billion, the midpoint of which is 10 per cent lower than last year, while Devon lowered the top end of its 2020 exploration and production budget by US$50-million to a range of $1.7 billion to $1.85 billion.
Concho said it would increase quarterly dividend by 60 per cent to 20 US per share, while Devon raised its by 22 per cent to 11 US cents per share.
Burgeoning oil production at the prolific U.S. Permian basin also helped both companies beat Wall Street’s profit estimates.
Boston-based cannabis firm Tilt Holdings Inc. (TILT-CN) rose 14.3 per cent after naming interim boss Mark Scatterday as chief executive officer on Wednesday, tasking him with turning around a company that teetered on the brink of collapse last year and lost almost $1 billion in market value..
Tilt, one of the top five U.S. cannabis companies by revenue, also appointed Chief Operating Officer Tim Conder to the additional role of president.
Formed by a four-way merger late in 2018, Tilt is also considering plans to sell its pot production business, among other options, as it sharpens its focus on cannabis-related technology, Mr. Conder told Reuters in an interview.
Mr. Scatterday and Mr. Conder moved into Tilt leadership roles last year, months after the company wrote down its assets by about US$500-million to just US$7-million as the sector struggles with oversupply, a sluggish retail rollout in Canada and uncertainties about the legalization of weed in the United States.
Several top cannabis producers including Aurora Cannabis Inc and Tilray Inc have announced layoffs and other cost-cutting measures to cope with the slump.
Mr. Scatterday and Mr. Conder said Tilt does not need to raise capital in the near future or make sweeping layoffs.
Garmin Ltd. (GRMN-Q) rose 6.8 per cent after the wearable fitness devices maker forecast full-year revenue above analysts’ estimates.
For the fourth quarter, it reported quarterly earnings of US$1.29 per share, exceeding the consensus estimate on the Street of US$1.04.
Chipmaker Analog Devices Inc. (ADI-Q) rose 4.5 per cent after it forecast second-quarter revenue that fell short of analysts’ estimates, as the company accounted for a US$70-million hit related to the coronavirus outbreak.
The company expects revenue of US$1.35-billion for the current quarter, plus or minus US$50-million, below estimates of $1.38 billion, according to IBES data from Refinitiv.
The rapidly spreading virus has killed over 2,000 in China and stricken some 74,000 people, confining millions to their homes, disrupting supply chains and delaying reopening of factories after the extended Lunar New Year holiday break.
Alimentation Couche-Tard Inc. (ATD.B-T) rose 0.2 per cent lower after Caltex Australia Ltd said on Wednesday that Britain’s EG Group has offered to buy the convenience store, petrol station and refinery firm, rivaling the Canadian company’s twice-improved A$8.80 billion bid.
EG Group offered A$3.9 billion ($2.61 billion) in cash for Caltex’s convenience store business and separate shares in a new, listed infrastructure and refinery company made up of Caltex’s remaining assets, the Australian firm said in a statement without disclosing the offer’s total valuation.
EG Group’s external spokesman was not available for comment outside office hours.
The offer from the British retailer comes on the heels of a sweetened A$8.8 billion cash bid last week from Couche-Tard, which the Canadian group said was final in the absence of a superior proposal.
On the decline
Bausch Health Companies Inc. (BHC-T) dropped 6.2 per cent after it reported a loss of nearly US$1.52 billion in its latest quarter as it settled a lawsuit over a stock plunge that hit investors in 2015.
The company says the net loss amounted to US$4.30 per diluted share for the quarter compared with a net loss of US$344 million, or 98 cents per diluted share, in the same quarter a year earlier.
On an adjusted basis, Bausch Health reported a profit of US$404 million for the final quarter of 2019, up from adjusted net income of US$368 million in the fourth quarter of 2018.
Revenue totalled $2.224 billion for the quarter, up from $2.121 billion in the same quarter a year earlier.
In December, Bausch Health said it would pay US$1.21 billion to resolve all claims against it in the so-called Valeant stock drop case, which was filed in a U.S. district court in October 2015. The company admitted no wrongdoing as part of the settlement.
Meal-kit delivery company Blue Apron Holdings Inc. (APRN-N) plummeted 17.9 per cent after saying on Tuesday it is considering going private and announced the closure of its Arlington, Texas facility.
The company, that went public in 2017, is also considering alternatives that could result in private ownership or sale of the company or some of its assets.
Overwhelmed by rising competition and falling sales, Blue Apron’s stock has been declining since its Wall Street debut. The stock fell almost 33 per cent so far this year.
Blue Apron, whose fourth-quarter revenue fell by 33 per cent to US$94.3-million, said it will consolidate its New Jersey and California facilities.
The company’s customer base also fell by 9 per cent to 351,000 at the end of the quarter ended Dec. 31.
With files from Brenda Bouw, staff and wires
David Leeder