A roundup of some of the North American equities making moves in both directions today
On the rise
Transat A.T. Inc. (TRZ-T) jumped almost 45 per cent in early afternoon trading on Tuesday after disclosing it is evaluating multiple takeover offers and has formed a special committee to weigh the merits of an acquisition.
On an adjusted basis, Shopify says it earned US$10.3-million or 9 US cents per share for the quarter, compared with an adjusted profit of US$4.2-million or 4 US cents per share in the first quarter of 2018.
Analysts on average had expected a loss of five cents per share for the quarter
“We’re off to an incredible start this year, as more merchants around the globe choose Shopify to start, grow, and manage their businesses,” said chief financial officer Amy Shapero in a statement. “Entrepreneurs and enterprises alike recognize that Shopify’s merchant-driven mission helps them build their most successful business and thrive in an ever-changing retail landscape. That’s why we continue to invest in our platform, expanding our product and feature set, and the overall Shopify experience - making commerce easier, more accessible, and better for everyone, everywhere.”
Merck & Co Inc. (MRK-N) was up 2.5 per cent on the heels of a higher-than-expected first-quarter profit and raising its earnings and sales forecasts for the year, due to surging sales of its cancer immunotherapy Keytruda.
The New Jersey-based pharmaceutical giant now expects full-year adjusted earnings per share of US$4.67-$4.79, rising from its prior forecast of US$4.57 to $4.72.
However, total revenue fell about 4 per cent to US$5-billion, as the company is franchising a majority of its restaurants. Analysts were expecting revenue of US$4.93-billion.
“Two years into the Velocity Growth Plan, our sustained performance gives us confidence that our strategy is working, as more customers are experiencing a better McDonald’s every day,” said president and CEO Steve Easterbrook in a release. “We remain focused on optimizing execution of the Plan, and our recent acquisition of Dynamic Yield further demonstrates our relentless determination to seize opportunities to unlock greater potential and position McDonald’s for long-term sustainable growth.”
On the decline
The Calgary-based energy company said its adjusted operating profit was US$165-million or 14 US cents per share, compared with an operating profit of USS$156-million or 16 US cents per share a year ago when it had fewer shares outstanding.
Analysts had projected an 8 US cent profit.
Analyst Thomas Matthews of AltaCorp Capital said: “Overall we view the release as being slightly negative as reported numbers missed our and consensus expectations for production, liquids and cashflow, although, in our view, the consensus expectations were subject to wide ranges which diluted the overall average. In our view, Q1/19 was always going to be a messy quarter as the Company integrated Newfield Exploration. Of note, Encana did mention that they have already achieved their $1mm/well cost reduction target in the Anadarko basin, the pace of which is ahead of expectations. Overall, while the quarter was messy, we do not see anything structurally broken and as such expect any weakness to be bought by the market in anticipation of a stronger Q2.”
Canadian National Railway Co. (CNR-T, CNI-N) was down 1.7 per cent after reporting weaker-than-anticipated first-quarter financial results after the bell on Monday, due largely to harsh winter weather.
The results led an equity analyst at RBC Dominion Securities to downgrade his rating for its stock.
“Despite the weather effect on volumes, which saw Q1 come in at up 3 per cent, management maintained its high-single digit volume growth target for 2019,” said Walter Spracklin. “To meet this target, it implies a very strong volume pace for the remainder of the year - and we are cautious of risk on three fronts: 1) potential slower growth due to the economy; 2) the volatile nature of certain growth sources (coal and crude); and 3) the capacity risk at CN. Despite these risks, we believe the company has put capital in the right places and our 2019 estimates align with management guidance.”
In a research note released Tuesday, CIBC World Markets analyst Mark Petrie said: “A modestly disappointing Q1 does not detract from our view that RBI represents a high-quality consumer name with upside owing to potential growth levers. We are somewhat cautious on valuation given the stock’s 25-per-cent performance year-to-date, as well as its narrowed discount gap relative to peers. Heading into QSR’s first investor day (May 15), it is possible investor expectations do not match company disclosures.”
The company said every one right will entitle the holder to subscribe for 0.5 common shares upon payment of the subscription price of $1.50 per common share, which it said is an approximate 20 per cent discount to the five-day volume-weighted average price on the TSX.
Alphabet Inc. (GOOGL-Q) dropped over 8 per cent after Google saw its slowest revenue growth in three years from increased competition in advertising, stumbles in its smartphone business and disruptive changes at YouTube that left the leading internet ad company lagging rivals.
Alphabet said its quarterly revenue rose 17 per cent from a year ago to US$36.3-billion, about US$1-billion short of Wall Street’s average estimate.
RBC Dominion Securities analyst Mark Mahaney said: “We’re modest buyers on the 7-per-cent a.m. pullback; we’d be material buyers on a material pullback. We don’t believe GOOGL is going through a material, sustained growth deceleration. 1) The TAM remains $1-trilling-plus in global advertising/marketing spend. 2) Based on our extensive survey work, we don’t see evidence of changes in Marketers’ view of Google – budget allocations, future spend intentions, or perceived ROI (absolute or relative). And 3) We believe GOOGL’s investments in Cloud, Internet-connected Homes & Autonomous Vehicles help set the company up for more years of premium growth & profits. And valuation remains reasonable, in our view, at 20 times Core Google 2019 estimated GAAP EPS, adjusting for cash.”
Tesla Inc. (TSLA-Q) dipped 0.4 per cent in the wake of a New York Times report that it plans to announce that it has started selling solar panels and related equipment for up to 38 per cent below the national average price
With files from staff and wires