A survey of North American equities heading in both directions
On the rise
Shares of Lululemon Athletica Inc. (LULU-Q) were higher by 0.9 per cent on Monday after it raised its current-quarter targets, as the sportswear maker benefited from a bump in demand for its apparel during the holiday season and underscored a stronger-than-anticipated shopping period in the United States.
Lululemon, like companies in the apparel space, has worked to introduce new colors and styles to its portfolio to keep customers interested and ward off competition from newer brands.
Customers “responded well” to Lululemon’s product offering during the holidays, said Meghan Frank, the company’s chief financial officer.
Lululemon also expects its gross margins to increase 30 basis points during the fourth quarter, which ends in January.
While the holiday season has been highly promotional, customers have also shopped more on their mobile phones , carefully comparing prices, as well as evaluating shipping times and return policies with the help of artificial intelligence-enabled chatbots.
Lululemon now expects quarterly net revenue in the range of US$3.560-billion to US$3.580-billion, and profit per share between US$5.81 to US$5.85.
This compared with its prior targets of net revenue in the range of US$3.475-billion to US$3.510-billion, and profit per share between US$5.56 to US$5.64.
The company had raised its annual forecasts in December hoping to drive demand for its pricey athleisure offerings during the holidays, as well as strong growth in its key international market, China.
Johnson & Johnson (JNJ-N) increased 1.7 per cent after it said on Monday it will buy neurological drugmaker Intra-Cellular Therapies (ITCI-Q) for US$14.6-billion, its biggest deal in at least two years, boosting its presence in the market for brain disease treatments.
The deal is meant to help J&J boost its growth in the drugs and medical devices businesses after it spun off the consumer health unit in 2023. The company’s blockbuster psoriasis drug Stelara is also set to face competition from several biosimilar versions in the U.S. this year.
The announcement comes as the industry gathers for its annual premium conference, JPMorgan Healthcare Conference, in San Francisco. Healthcare dealmakers expect a resurgence of deals exceeding $10 billion due to the potential for less antitrust scrutiny under President-elect Donald Trump.
J&J has offered to buy each share of Intra-Cellular for US$132, representing a 39-per-cent premium to the stock’s closing price on Friday.
J&J would gain access to Intra-Cellular’s already-approved therapy, Caplyta, to treat schizophrenia and depressive episodes associated with bipolar disorder in the United States.
Intra-Cellular is also seeking an expanded regulatory approval in the U.S. for Caplyta as an add-on therapy for major depressive disorder. The treatment brought in US$481.3-million in sales in the first nine months of 2024. Analysts expect the therapy to bring in more than US$1-billion in sales next year, according to data compiled by LSEG.
Billionaire investor Bill Ackman said on Monday that Pershing Square is increasing its stake in Howard Hughes Holdings (HHH-N) by US$1-billion and that the real estate developer plans to buy back shares for an additional US$500-million.
The deal would increase Pershing Square’s stake in Howard Hughes to somewhere between 61 per cent and 69 per cent, depending on how many investors agree to be bought out, from the 38 per cent it currently holds.
Shares of Howard Hughes, one of Pershing’s longest-held investments, rose in Monday trading.
Through this deal, the real estate company could become a “modern-day Berkshire Hathaway that would acquire controlling interests in operating companies,” Mr. Ackman said in a letter to the board of Howard Hughes.
Howard Hughes, spun off from real estate investment trust General Growth Properties in 2010, owns and manages commercial, residential and mixed-use real estate in the United States. It had a market value of US$3.6-billion, according to data compiled by LSEG.
Under the proposed deal, a Pershing Square unit will buy 11.8 million shares for US$1-billion from non-Pershing Square affiliate shareholders of Howard Hughes, while the real estate developer will commence a US$500-million share repurchase at US$85 per share for up to 5.9 million shares.
“We, like other long-term shareholders and this board, have been displeased with the company’s stock price performance,” Mr. Ackman said in the letter.
Howard Hughes’s shareholders can elect to receive the entire payment in cash or “roll over” all or a portion of their shares into the post-merger company, Mr. Ackman said.
Pipeline operator Kinder Morgan (KMI-N) was up 1.3 per cent after it said on Monday its unit Hiland Partners has agreed to buy a natural gas gathering and processing system in North Dakota from Outrigger Energy II LLC for US$640-million.
The oil and gas pipeline sector has seen increased consolidation in recent years as U.S. production grows, while persistent problems related to permits for new pipelines have made existing operators more valuable.
In 2023, Kinder Morgan acquired NextEra Energy’s (NXE-N) gas pipelines in South Texas for US$1.82-billion.
Kinder Morgan’s North Dakota acquisition includes a 270 million cubic feet per day (mmcfd) processing facility and a 104-mile (167.37-km) gas gathering header pipeline with 350 mmcfd of capacity connecting supplies from the Williston Basin area to high-demand markets.
The company said the deal, which is expected to close in the first quarter of 2025, will be immediately accretive and reduce future capital expenditure needed to accommodate the growth of its existing customers in the Bakken oil-producing region.
Dexcom (DXCM-Q) forecast total annual revenue largely in line with Wall Street expectations on Monday, on bets there will be strong demand for its continuous glucose monitors for diabetes patients, pushing the medical device maker’s shares higher.
Dexcom’s shares had fallen nearly 37 per cent last year, largely due to a slump in July after the company slashed its annual revenue forecast, blaming a restructuring of its sales team, fewer customers and lower revenue.
The California-based device maker is pinning its hopes on its recently launched device Stelo for adults aged 18 and older who do not use insulin, making it the first continuous glucose monitor available for over-the-counter sales.
“Dexcom made key strategic investments in 2024,” said CEO Kevin Sayer, adding the company plans to build on these investments in 2025 by advocating for greater CGM access globally.
The company is counting on further international expansion to drive growth after it said it improved access to its devices in markets such as Japan and France last quarter.
The medical device maker expects annual revenue of US$4.60-billion in 2025, compared with analysts’ estimates of US$4.61-billion.
It reported preliminary fourth-quarter revenue of at least US$1.11-billion, compared with analysts’ estimates of US$1.10-billion according to data compiled by LSEG.
On the decline
Bank of Montreal (BMO-T) was down 0.9 per cent after it agreed to pay more than US$40-million to settle U.S. Securities and Exchange Commission charges that broker-dealer failed to supervise its agency bond desk, the SEC said on Monday.
The U.S. regulator said it charged BMO Capital for failing to supervise employees who sold mortgage-backed bonds “using offering sheets and bond metrics that were misleading and did not accurately describe the characteristics of the collateral backing the bonds.”
BMO Capital, without admitting or denying the charges, agreed to an order requiring it to pay US$19.4-million in disgorgement, $2.2 million in pre-judgment interest, and a US$19-million civil penalty, the SEC said in a statement.
Cineplex (CGX-T) was lower by 1.2 per cent despite saying its box office revenue for December was up from a year earlier as movies released in November including Wicked and Moana 2 gained momentum.
The movie theatre company says box office revenue in December totalled $64.8 million, up from $51.8 million in December 2023.
However, the total was less than then $74.9 million seen in December 2019 before the pandemic.
Cineplex says Wicked has become the highest-grossing movie of all time based on a Broadway musical.
It added that Moana 2 is now one of the top 10 highest-grossing animated films of all time domestically, outperforming the first film.
The company says its combined box office and concession revenue totalled $112.0 million in December, representing 129 per cent of the total seen in December 2023.
U.S. clothing retailer Abercrombie & Fitch (ANF-N) dropped 15.7 per cent on Monday after it raised its annual net sales growth target for the current quarter helped by strong demand for its apparel collections during the holiday shopping season.
The company now expects fourth-quarter net sales to grow between 7 per cent and 8 per cent, compared with the prior target of 5-per-cent to 7-per-cent growth.
The apparel category had the highest discount rates in the U.S. at about 33 per cent this holiday season, according to data from Salesforce, as apparel makers compete with newer brands and online wares.
Macy’s (M-N) also slid after it said on Monday it expects fourth-quarter net sales to be slightly below the low-end of the previously issued range of US$7.8-billion to US$8.0-billion.
“Macy’s has probably summed up the sentiment around holiday shopping pretty well when they said they were expecting a cautious but engaged shopper,” said Brian Jacobsen, chief economist at Annex Wealth Management.
People have also bought more on their mobile phone, comparing prices, as well as shipping times and return policies with the help of artificial intelligence-enabled chatbots as they waded through a highly promotional holiday retail environment.
Reports from Salesforce and Adobe Analytics showed that online spending during the crucial holiday season that typically runs from November through December rose more than the initial forecasts made by the data firms.
Moderna (MRNA-Q) cut its 2025 sales forecast by US$1-billion on Monday, hurt by a slow adoption of its respiratory syncytial virus (RSV) shot and weak demand for COVID-19 vaccines, sending its shares plummeting.
Demand for its COVID vaccine has been waning after the pandemic, while adoption of its RSV shot - its second approved product- has been slower than expected, forcing Moderna to cut costs.
The company expects US$1.5-billion to US$2.5-billion in annual revenue, mostly in the second half, which is lower than a prior forecast of US$2.5-billion to US$3.5-billion and below market expectation of US$2.95-billion, according to data from LSEG.
CEO Stéphane Bancel said the vaccine maker aims to reduce 2025 cash costs by US$1-billion with a plan for an additional US$500-million in 2026. It expects to end 2025 with cash and investments of about US$6-billion.
The company is also betting on new products to help accelerate growth. It has filed an application with the U.S. FDA for the approval of its combination vaccine to protect against COVID-19 and influenza.
The regulator is also set to decide by May on the application for its next-generation COVID-19 vaccine, Moderna said.
Moderna expects to report data from a trial of its seasonal flu shot this year, if sufficient cases are accrued in the first season. Otherwise, the study will continue to a second season, Moderna said.
An independent group has informed the company that a late-stage trial of cytomegalovirus, or CMV vaccine, has not met the criteria for early efficacy, but has recommended the study should continue.
The company now expects to report data this year from the trial of the vaccine for the infection, which commonly causes birth defects.
It will report fourth-quarter results on Feb. 14. Shares of the company have lost 58 per cent of their value last year.
With files from staff and wires