A survey of North American equities heading in both directions
On the rise
First Quantum Minerals (FM-T) rose 2.6 per cent after it reported a wider-than-expected quarterly loss on Tuesday and said it had struck a US$500-million offtake deal with China’s Jiangxi Copper, its largest shareholder.
The miner said it would provide copper anode material from the Kansanshi mine in Zambia to Jiangxi under the three-year prepay arrangement.
First Quantum faces ‘going concern’ risk as pressure mounts from Cobre Panama shutdown
It is also evaluating the possibility of minority investments in the Zambian business from strategic investors, the company said.
It also said on Wednesday it was seeking US$20-billion through international arbitration after Panama ordered the closure of the company’s mine in the central American nation.
“We have provided a minimum value sought in those proceedings of $20 billion, reflecting an estimated fair market value of initial investment,” First Quantum CEO Tristan Pascal said on an earnings cal
Total copper production for the fourth quarter was 160,200 tons, compared with 206,007 tons in the year-ago quarter. Production at the Cobre Panama mine dropped 30.2 per cent to 62,616 tons in the reported quarter.
The company has lost over half its value since the open-pit copper mine in Panama, one of the world’s largest, was forced to shut down in November after the country’s top court ruled its contract unconstitutional following nationwide protests against its operation.
The company said it also recorded an impairment charge of US$900-million, which includes US$854-million at its Ravensthorpe nickel mine in Australia as a result of significant margin pressure due to weak nickel prices and high operating costs.
The company reported a net loss of US$1.45-billion, or US$2.09 per share, for the quarter ended Dec. 31, compared with a profit of US$117-million, or 17 US cents per share, a year earlier.
Gildan Activewear Inc. (GIL-T) was higher by 3.7 per cent after it hiked its dividend 10 per cent and generated earnings for its latest quarter that slightly beat analyst forecasts as new chief executive Vince Tyra tries to win over investors unsure about his leadership.
The Montreal-based maker of T-shirts and fleece, which reports in U.S. dollars, tallied a profit of 89 cents per share for the quarter ended Dec.31 on sales of $783-million. Net profit adjusted for one-time gains and costs was 75 cents per share. On that basis, analysts had expected earnings of 73 cents on revenue of $761-million.
The company said it will now pay a quarterly dividend of 20.5 cents per share, up from 18.6 cents. It also introduced a new forecast for its financial results this year, saying it will continue to benefit from market share gains in key product categories. It expects to boost adjusted earnings per share to a range of $2.92 to $3.07 while revenue growth will be up low single digits at best and flat at worst.
“Outstanding operational execution by our highly skilled team of employees across our global footprint delivered strong Q4 results,” Mr. Tyra said in a statement. “I see a bright future ahead, where we can leverage our strengths and continue to enhance value for all stakeholders.”
Gildan, a maker of T-shirts and fleece, shocked investors when it announced Dec. 11 that it had dismissed then-CEO Glenn Chamandy after a 40-year tenure at the company, the past 20 years as CEO. It named as his replacement Mr. Tyra, a former Fruit of the Loom executive.
- Nicolas Van Praet
Gibson Energy Inc. (GEI-T) reversed course and rose 4.6 per cent following the late Tuesday release of better-than-expected fourth-quarter results, a 5-per-cent increase to its dividend and a CEO succession plan.
The Calgary-based company announced adjusted EBITDA of $170-million, topping the Street’s expectation of $164-million as both its Infrastructure and Marketing segments outperformed. Distributable cash flow per share of 64 cents met the consensus forecast.
Gibson also bumped his quarterly dividend to 41 cents per common share, up by 2 cents, and revealed CEO Steve Spaulding intends to retire when a successor has been identified and appointed.
“GEI reported 4Q23 results that we view as largely in line,” said Stifel analyst Cole Pereira in a note. “EBITDA and DCFPS beat our forecasts but largely matched Street forecasts, with a modest consensus EBITDA beat largely Marketing-driven, while EPS missed due to higher depreciation and interest. GEI also increased its dividend 5 per cent ($1.64/sh annually), in line with Stifel and Street expectations, and now yielding an attractive 7.9 per cent. Additionally, President & CEO Mr. Steve Spaulding has announced he intends to retire but will stay in his current role until a successor is found. One potential concern that investors may have is that we believe Mr. Spaulding is spearheading the company’s re-contracting efforts for STGT. We view the quarterly results as neutral but expect the stock could under-perform on the CEO change announcement. That being said, GEI’s 2025 estimated valuation at 8.9 times EV/EBITDAS, 8.1 times P/DCFPS and 11.7 times P/E remains discounted vs. respective peer averages of 9.8 times, 8.9 times and 14.7 times.”
On the decline
IA Financial Corp. Inc. (IAG-T) fell 8.6 per cent after it fourth-quarter 2023 results fell short of expectations.
After the bell on Tuesday, the Quebec City-based insurance and wealth management company reported underlying earnings per share of $2.34, missing the consensus estimate of $2.47 due largely to higher corporate expenses and weakness in its U.S. results. Reported EPS of $2.46 were also lower than anticipated ($3.16) stemming from a $56-million post-tax actuarial charge.
A day after a scorching rally in Nvidia’s (NVDA-Q) shares this year came to a halt, it fell further on Tuesday as investors worried if the high-flying chip designer’s quarterly results would justify its towering valuation.
Nvidia has been at the heart of the frenzy around artificial intelligence (AI). A more than 40-per-cent surge in its stock this year helped it replace Alphabet (GOOGL-Q) as the third most valuable U.S. company, behind Microsoft (MSFT-Q) and Apple (AAPL-Q).
High-flying Nvidia’s earnings could test U.S. stock market’s AI dreams
The market capitalization of Nvidia was US$1.79-trillion on Friday.
“The market is maybe a little bit hesitant whether they (Nvidia) can deliver a strong enough guidance to reinvigorate the market even higher,” said Frank Lee, head of technology research at HSBC.
The company will report quarterly results on Tuesday after the bell. Analysts expect earnings of US$4.56 a share and revenue to rise to US$20.378-billion from US$6.05-billion a year earlier, according to LSEG estimates.
Still, Nvidia’s eye-popping run this year that pushed it to new peaks and powered gains in U.S. stock markets could make the stock vulnerable if earnings are less than stunning.
“You can’t come out and simply meet or slightly beat for the stock to go higher, Nvidia’s going to need to blow it away,” said Dennis Dick, a trader at Triple D Trading.
Nvidia options are pricing a swing of about 11 per cent in either direction following results, according to data from options analytics service ORATS.
Nvidia dethrones Tesla as Wall Street’s most traded stock
Shares of Walgreens Boots Alliance (WBA-Q) fell 2.5 per cent on Wednesday after the U.S. pharmacy chain operator lost its spot on the Dow Jones Industrial Average to Amazon (AMZN-Q), after nearly three years on the blue-chip stock index.
The replacement comes less than two months after Walgreens nearly halved its dividend payout to conserve cash as it seeks to win back market share from rivals and expand beyond its pharmacies.
The switch was prompted by Walmart’s (WMT-N) decision to split its shares, which would reduce the retailer’s weightage on the index.
Walgreens joined the Dow in 2018, replacing industrial conglomerate General Electric (GE-N) and becoming one of the five healthcare companies on the elite 30-consituent index. Since then, the stock has lost about 65 per cent of its value.
The company has appointed new top executives, shut unprofitable stores and unveiled the dividend cut in January as it deals with low consumer spending, a drop in COVID-19 product sales and a slow ramp-up of its nascent healthcare unit.
The stock has posted a decline in seven of the past eight years and is down nearly 15 per cent since the beginning of 2024. Shares of Walgreens trade at a forward price-to-earnings ratio of 6.54, compared with 9 for larger rival CVS Health (CVS-N).
S&P Dow Jones indices said late on Tuesday that adding Amazon would also increase consumer retail exposure, reflecting “the evolving nature of the American economy.” The change is effective next week, it said.
Besides dominating online retail, the Seattle-based company is a major player in cloud computing, entertainment and other industries.
Cybersecurity firm Palo Alto Networks (PANW-Q) on Tuesday forecast third-quarter billings below Wall Street estimates, signaling cautious spending by businesses in an uncertain economy.
Shares of the Santa Clara, California-based company fell 28 per cent, dragging rivals Zscaler (ZS-Q) and Fortinet (FTNT-Q).
Businesses are navigating in a digital world which is highly susceptible to online threat activity as they ramp up digitizing and migration to cloud. The sluggish spending has hit demand for companies such as Palo Alto.
Moreover, slowing growth in firewall business, which helps secure corporate boundary by inspecting traffic between the networks inside and outside the company, has also hit demand.
“We had a significant shortfall in our U.S. federal government business. We expect this trend will continue into our third and fourth quarter,” CEO Nikesh Arora said in a post earnings call.
He added that the company should revert back to its original expectations of mid-to-high double-digit billings growth towards the second half of 2025.
Palo Alto forecast third-quarter billings between US$2.30-billion and US$2.35-billion, compared with analysts’ average estimate of US$2.62-billion, according to LSEG data.
Revenue for the second quarter ended Jan. 31 grew about 19 per cent to US$1.98-billion, compared with estimates $1.97 billion.
Excluding items, the company earned profit of US$1.46 per share in second quarter, beating estimates of US$1.30.
The cybersecurity company also cut its annual billings to a range of US$10.1-billion to US$10.2-billion from its prior expectations of US$10.7-billion to US$10.8-billion.
North American solar stocks, including Guelph, Ont.-based Canadian Solar Inc. (CSIQ-Q), were lower after a downbeat forecast for the first quarter from peer SolarEdge Technologies Inc. (SEDG-Q).
The U.S. renewable energy firm expects quarterly revenue between US$175-mln and US$215-million, well below the Street’s previous forecast of US$406.3-million.
“We have been surprised to the extent investors looked past ENPH’s weak 1Q guidance amidst promises of 2H 2024 revenue growth, we are skeptical this will be the case for SEDG. 1Q 2024 revenue and gross margin guidance are materially worse than we expected, and it’s unclear if some of this is structural,” said BMO analyst Ameet Thakkar. “Cash burn resumed after prior call had suggested under-shipping would result in FCF generation. Finally, it sounded to us that under-shipments may extend for most of 2024.”
Shares of Teladoc Health (TDOC-N) slumped after the biggest publicly listed telehealth firm forecast 2024 sales below expectations on sluggish demand for its online mental health platform.
At least two analysts said while the company managed to improve its margin in the fourth quarter, the weaker sales forecast for this year highlighted continued challenges in demand for its online mental health platform, BetterHelp.
Citi analyst Daniel Grosslight said BetterHelp and the “anemic” forecast would likely weigh on shares.
The company expects its 2024 sales to be in the range of US$2.64-billion to US$2.74-billion, compared with analysts’ estimates of US$2.77-billion, according to LSEG data.
Sales from BetterHelp during the quarter marginally fell to US$276.17-million, as the number of people visiting the website declined and the cost of customer acquisition rose.
Teladoc’s fourth-quarter sales came in at US$660.50-million, missing analysts’ estimates of US$671.40-million.
With files from staff and wires
David Leeder