A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of HEXO Corp (HEXO-T) were up 3.3 per cent in mid-afternoon trading on Thursday after the Quebec-based cannabis company reporting second-quarter total net revenue of $13.4-million, up from $1.2-million a year ago and in line with expectations. Adult-use cannabis gross revenue, excluding excise tax, jumped to $14.8-million from $5.2-million in the previous quarter.
The results came after Wednesday’s announcement of a $263-million deal to buy Newstrike Brands Ltd. (HIP-X).
“This is an exciting time for HEXO as we continue to achieve milestones on the way to becoming a top two cannabis company,” said CEO and co-founder Sebastien St-Louis in a release.
“This quarter not only saw an exponential increase in gross revenue and production, but also saw us continue to execute on our promises including reaching a construction and licensing milestone on our 1,000,000 sq. ft. greenhouse expansion and listing on the NYSE-A. Just yesterday, we announced an agreement to acquire Newstrike Brands Limited. HEXO’s future is very promising, I am looking forward to continually driving shareholder value and achieving milestones with our team.”
Delta 9 Cannabis Inc. (NINE-X) sat 4.3 per cent higher after releasing year-end 2018 guidance.
The Winnipeg-based company projects revenues of between $7.6-million and $8.4-million for the twelve-month period ending Dec. 31, 2018, compared to $944,114 for the same period the prior year.
“Management believes that revenue growth and disciplined cost management will allow the Company to achieve positive cashflow in fiscal 2019,” it said in a release.
Ag Growth International Inc. (AFN-T) rose 3.3 per cent in the wake of the release of better-than-anticipated fourth-quarter financial results.
Adjusted EBITDA of $28-million exceeded the Street’s expectation of $25-million
Expecting a "bountiful" 2019, Desjardins Securities analyst David Newman said: "AGI reiterated its positive outlook for 2019, stemming from: (1) strong demand for grain, feed and fertilizer infrastructure in Canada; (2) pent-up demand for grain handling equipment and grain storage in the U.S.; (3) strong momentum in International with significant backlogs and with Brazil ramping; and (4) margin improvement. As a result of the harsh winter conditions in North America, AGI expects a deferral of Farm sales to 2Q19 from 1Q19, and Commercial sales to be weighted toward 2H19."
Apple Inc. (AAPL-Q) rose 1.1 per cent after an equity analyst at Cowen and Co started coverage of the tech giant with “outperform” rating.
“Does the iPhone business make Apple a trading stock or bond coupon? We think it’s a bit of both,” said Krish Sankar said in a research report released late Thursday. “The company has a 900 million strong, loyal iPhone customer base globally to which it can offer a growing ecosystem of devices such as wearables and new content subscriptions and service offerings.”
Shares of General Electric Co. (GE-N) rose 2.7 per cent despite its 2019 profit forecast falling short of analysts’ estimates on Thursday, as the company aims to spend to restructure its ailing power business.
GE said its earnings would improve in 2020 and beyond after a difficult, “reset” year in 2019.
Chief Executive Officer Larry Culp said GE will invest US$2.5-billion in restructuring that will yield returns after 2019.
“This is what constitutes a reset,” Mr. Culp said on a conference call.
“GE’s challenges in 2019 are complex but clear. We are facing them head on as we execute on our strategic priorities to improve our financial position and strengthen our businesses. We have work to do in 2019, but we expect 2020 and 2021 performance to be significantly better with positive Industrial free cash flow as headwinds diminish and our operational improvements yield financial results. We will continue to take thoughtful actions to reduce downside risk and increase upside optionality to create long-term value for our shareholders,” added Mr. Culp in a release.
GE projects adjusted earnings of 50 US cents to 60 US cents a share for 2019, below analyst expectations of 70 US cents.
A week after warning of a new cash outflow from its industrial businesses, GE said adjusted industrial free cash flow would be between negative US$2-billion and zero.
Shares of Snap Inc. (SNAP-N) jumped 12.9 per cent after BTIG analyst Richard Greenfield, a long-time bull, raised its rating for the social media company to “buy” with a Street-high target price of US$15. The average target is currently US$8.38.
“Your initial reaction is likely why now and what changed, as virtually everything that could go wrong for Snapchat over the past couple years since going public has gone wrong,” he said. “Performance advertisers are laser focused on return on investment and spend (and spend more) where they see a compelling return.”
On the decline
Trade sensitive stocks dipped in morning trading amid increased uncertainty stemming from trade talks between the United States and China. New reports suggested the two economic powers are unlikely to meet again until April at the earliest.
“The situation with trade is causing indigestion for investors early on. The deeper concern that is starting to creep up is that there is no sense of urgency at this point,” Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey, told Reuters.
Boeing Co. (BA-N) was down 0.6 per cent as the fallout from the grounding of 737 Max jets continues.
In a research note released Thursday, Canaccord Genuity analyst Ken Herbert said: “The FAA was the last major regulatory agency to move to ground the 737 MAX [on Wednesday] after Canada did so earlier in the day. The focus now for the 737 MAX and investors is the potential financial implications for Boeing and the supply chain. In spite of the track record of the MAX in the US, we are surprised the FAA waited as long as it did to ground the fleet. According to the grounding order, the FAA received information Tuesday from satellite imagery and from the crash wreckage that indicate similarities between the LionAir and Ethiopian accidents, which justify the further investigation and grounding. We believe the noise around the software fix and potential implications for Boeing’s 2019 FCF [free cash flow] will be a headwind for the stock”
“We’re at the heart of the implementation cycle of our strategic plan. The material transformations, especially in the fleet, lead to an increase in costs, which is a necessary step in order to improve our medium-term performance. If we add fuel and currency to that, we did not yet have all the right cards in hand to improve our results. We look forward to seeing our first two A321LRs arrive in the next three months, the first step before we start reaping the benefits of the changes in the coming years,” said president Jean‑Marc Eustache in a release.
“We think organic growth will slow following a solid 2018 result and we think that M&A price discipline may take longer to execute,” said Paul Holden.
Dorel Industries Inc. (DII.B-T, DII.A-T) was down 9.3 per cent after announcing fourth-quarter results that fell short of expectations on the Street. Revenue was US$683.5-million, up from US$677.1-million a year ago. Analysts were expecting US$708.6-million.
The Montreal-based company also announced it is in the process of launching a global restructuring program.
“Dorel Home has again performed well and continues to benefit from our market-leading innovations in e-commerce. At the same time, we were disappointed by fourth quarter earnings at Dorel Juvenile and Dorel Sports. Both segments were affected by lower than expected industry-wide consumer demand over the holiday season and the on-going changes in the consumer products industry. We are in the process of actively addressing these realities,” said Dorel president and chief executive Martin Schwartz.
“Despite the challenges facing the retail sector as a whole, we are committed to continuing to take action to build value for Dorel shareholders, including making some tough but necessary decisions. We have been acting on the recognition that the way our industry does business and the expectations and behaviours of customers and consumers are all changing. Dorel is in the process of initiating a restructuring program to evaluate our global footprint and to optimize our Company to meet these new realities. We’re confident that this program will help us be more efficient, improve performance, and maximize long-term value for our shareholders.”
Magellan Aerospace Corp. (MAL-T) fell 4 per cent after it reported weaker-than-anticipated fourth-quarter results on Wednesday evening. The Mississauga-based company report revenues of $254.4-million and earnings per share of 51 cents, missing the consensus projections of $240.7-million and 38 cents.
Facebook Inc. (FB-Q) lost 1.5 per cent after suffering a 17-hour partial outage.
“Yesterday, a server configuration issue made it difficult for people to access our apps and services. We are 100 percent back up and running and apologize for any inconvenience,” a Facebook spokesperson said.
“We are still investigating the overall impact of this issue, including the possibility of refunds for advertisers.”
With files from staff and wires