A roundup of some of the North American equities making moves in both directions today
On the rise
In the wake of the release of second-quarter financial results after the bell on Monday that blew past estimates on the Street, shares of TFI International Inc. (TFII-T) were up 2.4 per cent.
In a research note, Laurentian Bank Securities analyst Mona Nazir said: “Despite a cautious tone on the last quarterly conference call and foreshadowing of Q2/20 softness across over 75 per cent of TFI’s operating segments, we view the near 40-per-cent EBITDA beat and 90-per-cent-plus EPS beat vs. consensus as surprising (Laurentian Bank Securities at higher end of Street range). While revenue contracted over double digits in the P&C, LTL, and TL segments, it was completely offset by its cost containment strategy, an overall continued focus on its asset light model alongside assistance from the CEWS program (Canadian Emergency Wage Subsidy). We view management’s prudent and focused approach and related financial performance in a positive light.”
West Fraser Timber Co. Ltd. (WFT-T) rose 3.4 per cent in the wake of the release of quarterly results that topped expectations on the Street.
Raymond James analyst Daryl Swetlishoff said: “Our constructive view on building materials markets is fueled by better than expected U.S. Housing demand, a robust repair and reno market as stay at home measures persist through the summer months, coupled by a lack of meaningful inventory as producers curbed supply following the outbreak of COVID-19. With low inventory and a strong U.S. housing macro we expect pricing to hold up better than the ‘boom & bust’ 2018 market. We expect WFT to materially benefit from current strong lumber markets and note despite the sharp rally since March lows, shares remain 50 per cent below levels during the 2018 lumber rally.”
Pfizer Inc. (PFE-N) was up 4 per cent after it beat analysts’ estimates for second-quarter profit on Tuesday and raised its full-year earnings forecast, as demand for cancer drug Ibrance and blood thinner Eliquis offset lower uptake of other treatments in the COVID-19 pandemic.
The company said it had taken a roughly $500 million hit to sales due to a drop in visits to hospital or the doctor’s office globally due to the health crisis.
Pfizer raised its forecast for 2020 adjusted profit to between US$2.28 and US$2.38 per share, however, from a prior estimate of between US$2.25 and US$2.35, and said it assumed vaccination rates and patient visits would start to revive in the third quarter.
Pfizer and German partner BioNTech SE said on Monday they were beginning testing of their coronavirus vaccine candidate in a large global study.
The U.S. drugmaker, however, said its 2020 forecast did not include any revenue from the vaccine and, like other pharmaceutical companies, it is contending with the disruption to some non-urgent medical procedures brought on by the pandemic.
Excluding items, Pfizer earned 78 US cents per share, beating the average analyst estimate of 66 US cents, according to IBES data from Refinitiv.
Marlboro maker Altria Group Inc. (MO-N) rose 1 per cent after it said on Tuesday it expected full-year earnings to rise as much as 4 per cent from last year and announced plans to make its IQOS heated-tobacco devices available in more markets across the United States.
The company also increased its annual dividend by 2.4 per cent, saying it had more clarity on the COVID-19 pandemic’s effects on consumer demand.
Altria said it would expand IQOS to four additional U.S. markets and partner with retailers to make the devices more broadly available over the next 18 months.
In July, IQOS received U.S. Food and Drug Administration approval to be marketed as a modified risk tobacco product.
Altria is among the first U.S. companies to reinstate earnings forecasts and said it expects full-year adjusted earnings of US$4.21 to US$4.38 per share, compared with a profit of US$4.21 per share in 2019.
However, that was still lower than the company’s prior outlook, before it was withdrawn due to the uncertainties around the pandemic’s economic impact.
Analysts on average expect 2020 earnings of US$4.29, according to IBES data from Refinitiv.
Superior Plus Corp. (SPB-T) increased 1.1 per cent in reaction to the premarket announcement of the acquisition of Champagne’s Energy, a retail propane distribution company.
Champagne delivers approximately 11 million gallons of propane and distillates annually to retail and commercial customers in Maine.
ATB Capital Markets’ Nate Heywood said: “Overall, we view the announcement as positive, as Superior was able to execute on its strategy with another strategic U.S. tuck-in acquisition on the east coast following the preferred share investment from Brookfield Asset Management.”
On the decline
MEG Energy Corp. (MEG-T) slid 7 per cent despite reporting second-quarter results after the bell on Monday that exceeded expectations on the Street.
Raymond James analyst Chris Cox said: “As a long-term play on an oil price recovery, we believe few names offer the upside potential that MEG does. While this is at least in part due to the elevated balance sheet, we view the leverage and liquidity profile as manageable and well-known risks. Supporting this view, our estimates point to a balanced funding profile over the next 12-18 months at strip pricing, even with the roll-over of an attractive hedging profile that insulated the 1H20 results. Our enthusiasm to the long-term risk-reward balance is tempered by a more cautious positioning near-term toward a potential oil price recovery. Furthermore, we view the need to catch up on sustaining capital coming out of this price collapse as a factor potentially weighing on the initial recovery for the stock.”
George Weston Ltd. (WN-T) lost 0.8 per cent after reporting a $255-million loss in its latest quarter despite a 6.5-per-cent increase in revenues as its operations were significantly affected by COVID-19.
The retail, bakery and real estate business says it lost $1.66 per share for the period ended June 13, compared with a $1.19 per share or $184-million profit in the second quarter of 2019.
George Weston says it incurred about $312-million in COVID-19 related costs, mainly from Loblaw Companies Ltd. but also Weston Foods and Choice Properties Real Estate Investment Trust.
Excluding one-time items, its adjusted net profit decreased 46 per cent to $142-million or 93 cents per share, down from $263 million or $1.70 per share in the prior year.
Raytheon Technologies Corp. (RTX-N) slipped 0.2 per cent after it topped analysts’ estimates for quarterly profit and sales, boosted by strength in its defence business, which makes parts for Lockheed Martin’s F-35 fighter jets.
Raytheon said it achieved a record backlog of US$73.1-billion from its defence business in the second quarter, pointing to strong demand from the U.S. government and international customers.
“This also points to how well our (defense) programs are funded and their alignment to the national defence strategy,” Raytheon Chief Financial Officer Toby O’Brien told Reuters.
Raytheon gets about 30 per cent of its defence sales from international customers.
The company said it continues to see full-year free cash flow of US$2-billion, with its commercial aerospace business to be around break-even and defense business generating about US$3.5-billion in cash by the end of the year.
The pandemic has extracted a heavy toll on the air industry, with Raytheon having warned last month it expects total commercial aero sales to be down about 50 per cent between the second and fourth quarter.
McDonald’s Corp. (MCD-N) lost 2.2 per cent in the wake of reporting better the bell a bigger-than-expected drop in global same-store sales as the burger chain’s restaurants across the world were shut because of the COVID-19 pandemic, limiting operations to only drive-thru and delivery.
Global same-store sales fell 23.9 per cent for the second quarter ended June 30, dragged down by big international markets including the United Kingdom, France and Latin America.
Analysts had forecast a 23.24-per-cent fall, according to IBES data from Refinitiv.
In the United States, where it operates more than a third of its restaurants, same-restaurant sales fell 8.7 per cent, but were better than the anticipated 9.97-per-cent fall, as most locations were able to stay open with drive-thru and delivery options.
As lockdowns eased, sales improved and losses were not as bad, providing some optimism for a measured rebound.
Harley-Davidson Inc. (HOG-N) fell 0.8 per cent in the wake of revealing a strategy to restructure its business after reporting an unexpected quarterly loss due to disruptions caused by the coronavirus pandemic.
As part of its “Rewire” strategy, the company will streamline its planned product portfolio by about 30 per cent and focus on 50 markets with growth potential in North America, Europe and parts of Asia Pacific.
Harley reported a loss of 60 US cents per share for the quarter through June, compared with a profit of US$1.23 per share a year ago. Analysts had on average expected the profit to come in at 4 US cents per share, according to IBES data from Refinitiv.
Motorcycles and related products revenue dived 53 per cent year-on-year to US$669-million, hurt by the temporary suspension of production during the quarter due lockdowns to curb the spread of the new coronavirus.
Retail sales in the United States, its biggest market, plunged 27 per cent year-on-year, the steepest fall in at least six years.
U.S. industrial conglomerate 3M Co. (MMM-N) was down 5 per cent after it missed Wall Street estimates for quarterly profit and revenue on Tuesday, hurt by a plunge in demand across its business units due to the economic impact of the coronavirus crisis.
3M is the world’s biggest producer of N95 respirator masks and has seen demand surge as governments globally fought over supplies of protective equipment for healthcare and other essential workers.
However, sales of the wide range of office and industrial supplies it churns out have declined as global economic activity sank and millions of employees retreated to working from home
Revenue at 3M’s transportation and electronics division, which sells everything from protective films to adhesives for automakers, fell 20.9 per cent and accounted for about 27 per cent of its total revenue.
The company also reported strong declines in demand for oral care and aerospace products and net sales for the quarter fell slightly more than expected to US$7.2-billion from US$8.2-billion.
With files from staff and wires
David Leeder