A survey of North American equities heading in both directions
On the rise
Toronto-based IT service management provider Converge Technology Solutions Corp. (CTS-T) soared after it announced before the bell it has entered into an arrangement agreement to be acquired by an affiliate of U.S.-based H.I.G. Capital in a $1.3-billion all-cash transaction.
Shareholders will receive $5.50 in cash per common share. It closed at $3.53 on Thursday.
“Management indicated that they anticipate the deal to close in mid to late April, subject to customary approvals,” said Ventum Capital Markets analyst Rob Goff in a research note. “Notably, with today’s introduction of HSR business anti-competition and filing requirement rules in the U.S., the arrangement will be filed prior to the deadline of the new form implementation. Therefore, the acquisition will be grandfathered under the previous framework and not subject to a longer review process, providing confidence in a swifter deal close. We are moving our rating to Tender and aligning our PT with the takeover offer at C$5.50 per share with our prior 12-month PT at C$6.00.
“Our Tender rating assigns limited deal risk associated with the offer. Management noted that H.I.G. represented the highest offer in the review process. While not a parameter within the review, CTS noted that it had received cash bids. While we ascribe a low probability to a competing bid, the potential does exist where a public peer with higher-valued shares could entertain a stock and cash offer. Management noted that on Monday it will be releasing preliminary Q4/24 results towards the upper end of its guidance.”
Energy infrastructure firm AltaGas (ALA-T) and pipeline operator Keyera (KEY-T) headed in opposite directions after they entered into long-term agreements for processing liquefied petroleum gases (LPGs) on Friday.
Keyera entered a 15-year tolling contract at AltaGas’ Ridley Island Energy Export Facility for 12,500 barrels per day (bpd) of LPG export capacity.
In turn, AltaGas signed an 18-year agreement for 8,000 bpd of fractionation capacity at Keyera’s natural gas liquids (NGLs) processing and storage facility in Saskatchewan.
U.S. President Donald Trump imposed and later suspended tariffs on Canadian goods, including a 10% levy on energy imports.
As a result, Canadian companies are looking to reduce dependence on the U.S. by looking towards other markets such as those in Asia.
AltaGas’ Ridley export facility is expected to be operational by the end of 2026, with the company saying that it requires only ten shipping days to export to the LPG markets in Northeast Asia.
The 18-year fractionation contract, which includes processing of NGLs to be produced at AltaGas’ Pipestone II plant in Alberta, will provide long-term capacity for AltaGas’ production in Montney shale.
“These agreements strengthen the long-term growth and predictability of cash flows for both companies and strengthens Canada’s link into key Asian markets,” said Vern Yu, President and CEO of AltaGas.
Shares of Uber Technologies (UBER-N) jumped to a three-month high on Friday after billionaire hedge fund manager Bill Ackman announced that he had taken a stake worth about US$2.3-billion in the ride-sharing platform.
In a post on social media platform X, Mr. Ackman said he began acquiring a stake in Uber in early January and now owns 30.3 million shares in the company.
“While a great business, Uber suffered from erratic management,” said Ackman, who is the founder and chief executive of New York-based Pershing Square Capital Management.
“Since he joined the company in 2017, Dara Khosrowshahi (Uber) CEO has done a superb job in transforming the company into a highly profitable and cash-generative growth machine.”
Uber shares jumped nearly 10 per cent to as high as US$76.76, the highest level since October 30, giving it a market capitalization of about US$161-billion. The company’s shares have gained nearly 26 per cent so far this year. It lost 2 per cent in 2024.
Earlier this week, Uber beat estimates with a 20-per-cent jump in fourth quarter revenue to US$11.96-billion. Its adjusted net profit of 23 US cents, however, missed analyst expectations of 50 US cents, according to LSEG data.
Pinterest (PINS-N) forecast first-quarter revenue above market estimates after the bell on on Thursday, betting on the image-sharing platform’s artificial intelligence-powered advertising tools to boost ad spend, sending its shares up over 19 per cent.
The forecast followed better-than-expected record monthly active users and revenue during the fourth quarter, thanks to a robust holiday shopping season.
Advertisers turn to Pinterest for its AI-driven ad tools such as Performance+ suite, designed to help advertisers better target users with automation features.
“Our strategy is paying off. People are coming to Pinterest more often, the platform has never been more actionable,” CEO Bill Ready said in a statement.
Rising Gen Z users and new shoppable content have made the platform more lucrative for marketers.
That is bolstered by Pinterest’s third-party ad deals with Google and Amazon.com, which are expanding and helping the company to diversify its revenue streams.
“Pinterest has strong global engagement, but the ad dollars are still disproportionately tied to North America,” said Jeremy Goldman, senior director of briefings at eMarketer.
“Expanding third-party ad integrations could open up new revenue streams, but execution here has historically been slow.”
Ecommerce merchants such as those on Shopify or Adobe Commerce can integrate their products into Pinterest by using platform-specific extensions that are offered by the company.
Its first-quarter revenue forecast of US$837-million to US$852-million was above analysts’ average estimate of US$832.8-million, according to data compiled by LSEG.
The company expects adjusted core earnings of US$155-million to US$170-million, above the average estimate of $140.8 million.
Global monthly active users on the platform were at an all-time high of 553 million, exceeding estimates of 545.8 million. They rose 11 per cent from a year earlier.
Revenue in the fourth quarter ended December 31 grew 18 per cent to US$1.15-billion, compared with estimates of US$1.14-billion.
Adjusted profit per share of 56 US cents missed estimates of 65 US cents due to certain tax adjustments in the quarter.
Affirm (AFRM-Q) shares jumped 21.8 per cent on Friday, after the buy now, pay later lender posted a surprise quarterly profit on the back of a strong holiday shopping season and forecast an upbeat annual revenue.
Retailers offered discounts on everything from apparel to electronics to lure budget-conscious shoppers, while online sales remained strong.
Gross merchandise volume (GMV) - the total dollar amount of all transactions on the Affirm platform - jumped 35 per cent to US$10.1-billion in the second quarter ended December 31, exceeding analysts’ estimates of US$9.57-billion, according to LSEG.
In a letter to shareholders late on Thursday, Affirm said the merchandise and consumer electronics categories contributed significantly to growth.
GMV growth from Affirm’s top five merchants and platform partners collectively jumped 40 per cent, partly due to increasing demand from consumers for zero-percent financing.
The San Francisco-based company’s total revenue soared 47 per cent to US$866-million, beating estimates of US$807.- million.
“Affirm is on our short list of transformative fintechs that can become big companies over time,” William Blair analyst Andrew Jeffrey said.
Affirm reported net income of US$80.4-million, or 23 US cents per share, in the October-to-December period, compared with a loss of US$166.9-million, or 54 US cents per share, a year earlier.
Analysts had expected the company to report a loss of 15 US cents per share.
“So far other fintech results have been lackluster this quarter, with some posting significant growth guidance but weak profitability. In contrast, Affirm demonstrated that a fintech can have both strong volume growth and excellent profitability margin,” BTIG analysts said.
Take-Two Interactive Software (TTWO-Q) forecast its fourth-quarter bookings below estimates on Thursday, owing to weaker spending on mobile games as consumers grapple with economic uncertainties and still-high inflation.
The videogame industry has experienced two tumultuous years marked by industry-wide layoffs, studio closures and project cancellations, owing to high borrowing costs and weak sales.
Take-Two’s mobile titles such as Empires & Puzzles underperformed its own expectations as players cut back on in-game spending, company executives said on a post-earnings conference call.
The company acquired FarmVille maker Zynga in 2022 to boost its heft in the mobile game industry and better compete with rivals.
“The mobile division is likely at the end of its integration process and I’d expect it to start contributing more significantly to Take-Two’s bottom line,” Joost Van Dreunen, a lecturer at NYU’s Stern School of Business, said.
Shares of the videogame publisher jumped 14 per cent after it reiterated that its highly anticipated Grand Theft Auto VI is set to launch in the fall of 2025.
GTA is a long-running action-adventure franchise that puts players in a sandbox environment filled with fast cars, guns and dynamic characters.
“The lack of news (on GTA VI) had investors concerned that it might slip, so this is good news,” Wedbush Securities analyst Michael Pachter said.
Take-Two also reiterated its expectation of a rise in net bookings in fiscal 2026 and 2027, with many analysts expecting that growth to come from “GTA VI.”
The company expects bookings to be between US$1.48-billion and US$1.58-billion for the fourth quarter, the midpoint of which is slightly below analysts’ average estimate of US$1.54-billion, according to data compiled by LSEG.
Besides “GTA VI,” Take-Two expects to release big titles such as Borderlands 4 and Mafia: The Old Country this year.
On an adjusted basis, it earned 72 US cents per share, compared with the estimates of 57 us cents.
On the decline
Amazon (AMZN-Q) shares dipped 4.1 per cent on Friday after the online retailer’s cloud growth fell short of expectations, prompting a subdued sales forecast for the current quarter.
Amazon Web Services (AWS), the company’s cloud division, reported a 19-per-cent rise in revenue to US$28.79-billion, just shy of the US$28.87-billion analysts were expecting, according to LSEG data.
The Seattle-based company joined Microsoft Azure and Google Cloud, the second- and third-biggest cloud players, in reporting weaker-than-expected cloud figures.
It adds to investor concerns about Big Tech’s billion-dollar AI investments, especially with the emergence of cheaper competitors such as China’s DeepSeek.
“It appears, 2025 is a year of investment for AWS with the payoff likely in 2026 and beyond exacerbated by lower initial operating margins in AI,” Pivotal Research Group analyst Jeffrey Wlodarczak said.
“We expect by 2H’25 this heavy capex investment + accelerating AI adoption should begin to materially reaccelerate cloud revenue.”
However, Amazon’s retail segment counterbalanced the cloud weakness, achieving a 7-per-cent growth in online sales to US$75.56-billion, compared with estimates of $74.55 billion.
At least seven brokerages raised their price targets on the stock following the result, bringing the median target to US$260, according to LSEG data.
Amazon’s 12-month forward price-to-earnings ratio is 37.3, higher than Alphabet’s 22.7 and Microsoft’s 29.3.
Canopy Growth Corp. (WEED-T) shares were closed down 27. per cent after the cannabis company reported a larger loss than expected. The company reported a loss of $121.9-million or $1.11 per share for the quarter ended Dec. 31, which was more than the loss of 54 cents per share expected by analysts, according to Refinitiv Eikon data.
The loss was an improvement from a loss of $216.8-million or $2.62 per share a year earlier. Net revenue came in at $74.8-million, down 5 per cent from $78.5-million a year earlier. The expectation was for revenue of $69.2-million. Adjusted EBITDA was a loss of $3.5-million, which the company said was a 61-per-cent improvement from a loss of nearly $9-million for the same quarter a year earlier, driven by benefits from its cost-savings program.
- Brenda Bouw
U.S. automaker Tesla (TSLA-Q) was down 3.4 per cent after it sales of China-made electric vehicles fell 11.5 per cent to 63,238 units in January from a year earlier, data from the China Passenger Car Association showed.
Deliveries of China-made Model 3 and Model Y vehicles were down 32.6% from December.
Chinese rival BYD , with its Dynasty and Ocean series of EVs and plug-in hybrids, sold 296,446 passenger vehicles last month, a 47.5-per-cent increase on the year, but a 41.8-per-cent decline from the prior month.
Last month, the U.S. EV giant launched a revamped version of its best-selling Model Y SUV in China where it is under increasing pressure from challengers such as Xiaomi, the Beijing-based smartphone maker that fast-tracked an EV success.
Xiaomi’s electric sedan SU7 outsold the Model 3 in December, and its first SUV is expected to be launched this summer to take on the Model Y.
Tesla planned a suspension of part of the new Model Y lines in Shanghai for upgrades for around three weeks over the Chinese Lunar New Year, Bloomberg News reported.
With files from staff and wires