A roundup of some of the North American equities making moves in both directions today
On the rise
Great-West Lifeco Inc. (GWO-T) was up 0.6 per cent with the premarket announcement that it has received approval from the TSX for the renewal of its Normal Course Issuer Bid.
Under the renewed NCIB, it may purchase for cancellation up to 20 million common shares, representing approximately 2.16 per cent of its 926,336,486 issued and outstanding Common Shares on Jan. 16.
Great-West said it will utilize the NCIB “in order to mitigate the dilutive effect of issuing securities under the Corporation’s Stock Option Plan and for other capital management purposes.”
TransAlta Corp. (TA-T) was 2.9 per cent higher after releasing 2020 financial guidance after the bell on Thursday that largely met the Street’s expectations.
The company also raised its quarterly dividend to 4.25 cents per share from 4 cents.
In a research note, Industrial Alliance Securities analyst Jeremy Rosenfield said: “TA offers investors (1) a balanced mix of contracted and merchant power exposure, (2) improving balance sheet and cash flow fundamentals, and (3) long-term upside to the Alberta power market. We continue to see the shares as undervalued, and with greater clarity on the overall outlook, we feel no more risky than the sector average.”
A day after it became the fourth U.S. company to top a market value of more than US$1-trillion, shares of Google-parent Alphabet Inc. (GOOGL-Q) were up 2 per cent.
The internet search giant’s stock is up nearly 17 per cent over the past three months, outpacing a broader rally in the S&P 500 index over the same period by six percentage points.
Canopy Growth Corp. (WEED-T) gained 2.1 per cent after announcing it is revising its timeline for its beverage launch before the bell on Friday.
Canopy says it received its licence from Health Canada for its beverage facility in November but the “scaling” process isn’t complete.
“Canopy has had seven weeks to work with THC in the brand new beverage facility to scale processes and IP it has developed in the R&D environment,” said CEO David Klein in a release. “In order to deliver products that meet our customer’s high standards we are electing to revise the launch date while we work through the final details.”
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On the decline
Bombardier Inc. (BBD-B-T) slid 0.8 in early trading on Friday, a day after it slashed its 2019 financial outlook.
A pair of equity analysts downgraded its stock in response to Thursday’s announcement, which caused its share to plunge by as much as 36 per cent.
Two major rating agencies also voiced concerns over the finances of Bombardier, whose future is being questioned as it considers options to raise its more than US$9-billion debt.
S&P Global Ratings changed its outlook to “negative” from “stable” on Friday, following in the footsteps of Moody’s Investors Service, which did the same Thursday evening.
HEXO Corp. (HEXO-T) dropped over 9 per cent after a premarket announcement that it has entered into a definitive agreement with institutional investors for the purchase and sale of 11,976,048 common shares at an offering price of US$1.67 per share for gross proceeds of US$20-million.
The Company has also agreed to issue to the investors common share purchase warrants to purchase 5,988,024 common shares. The warrants will have a five year-term and an exercise price of US$2.45 per share.
The Company expects to use the net proceeds for working capital and other general corporate purposes, including research and development.
Schlumberger NV (SLB-N) decreased 1 per cent after it reported a slightly better-than-expected quarterly profit on Friday as higher drilling activity in international markets boosted demand for its equipment and services, offsetting weakness in North America.
International markets have been a bright spot for oilfield service providers since 2018, as U.S. oil and gas producers have cut back on drilling wells to satisfy investors seeking more buybacks and dividends.
Schlumberger, an industry bellwether, said international revenue rose 8 per cent to US$5.72-billion in the fourth quarter, while it fell 13 per cent in North America.
Tesla Inc. (TSLA-Q) lost 0.6 per cent after the National Highway Traffic Safety Administration (NHTSA) said Friday it will review a petition asking the agency to formally investigate 500,000 Tesla models over sudden unintended acceleration reports.
The petition covers 2012 through 2019 model year Tesla Model S, 2016 through 2019 Tesla Model X, and 2018 through 2019 Tesla Model 3 vehicles the agency said. The petition cites “127 consumer complaints to NHTSA involving 123 unique vehicles. The reports include 110 crashes and 52 injuries,” the agency added. Tesla did not immediately comment Friday.
Gap Inc. (GPS-N) slid 0.4 per cent after it called off a plan to spin-off its Old Navy brand on Thursday and said it would instead work to stem dropping sales, while fewer discounts during the holiday season helped earnings.
The move to cancel the separation came as a surprise as just two months ago the company had stuck to its plan despite several analysts calling for the strategy to be canned due to weak sales and the abrupt exit of Chief Executive Officer Art Peck.
The spin-off plan was unveiled in February last year when Old Navy was a bright spot for the company, which was struggling with out-of-fashion apparel at its Gap brand.
Citi analyst Paul Lejuez said: “We did not believe the spin-off made sense. This is the right decision for the company and we expect the news that it is off the table to be viewed positively. Management also updated F19 guidance, which now assumes F19 comps at the high end of down middle single digits (in-line with our estimate of a 4-per-cent decline) and F19 EPS moderately above previous guidance of $1.70-1.75, with the upside in 4Q driven by lower than expected promos at Old Navy. We view the stabilization of Old Navy margins during the highly promotional holiday period as another positive for the stock near-term, as ON is up against easy comp and margin comparisons in F20.”
CSX Corp. (CSX-Q) was lower by 0.5 per cent on the heels of announcing after the bell Thursday its profit declined 9 per cent in the fourth quarter as the railroad hauled 7 per cent less freight.
The Jacksonville-based company said Thursday it earned US$771-million, or 99 US cents per share, in the quarter. That’s down from US$843-million, or US$1.01 per share, a year ago.
The results topped the 97 US cents per share profit that the analysts surveyed by Zacks Investment Research expected.
RBC Dominion Securities analyst Walter Spracklin said: “We believe CSX’s in-line Q4 and new 2020 guidance that was in line with expectations will be well received given the macro context and significant coal headwinds. Moreover, we believe investors will be particularly impressed by the improvement in the company’s operating and service metrics, making CSX better positioned than most to benefit meaningfully should conditions improve.”
With files from Terry Weber, staff and wires
David Leeder