A survey of North American equities heading in both directions
On the rise
Shares of Cenovus Energy Inc. (CVE-T) were higher by 2.5 per cent after it said on Thursday it expects higher production from its U.S. refineries in 2024 as the Canadian company’s two refineries restarted operating at full capacity.
The company had been grappling with production snags following a deadly fire at its refinery in Toledo, Ohio last year and an explosion at the refinery in Superior, Wisconsin in 2018.
Cenovus forecast downstream throughput for 2024 between 630,000 and 670,000 barrels per day (bpd), compared with 580,000 bpd to 610,000 bpd expected this year.
Cenovus also expects higher operating costs in 2024 due to maintenance and repair activities.
The Calgary-based company forecast expenses between $4.5-billion and $5-billion in 2024, higher than its estimated 2023 costs of $4-billion to $4.5-billion.
“We will remain focused on reducing costs and continued capital discipline,” Cenovus CEO Jon McKenzie said.
Global oil prices have cooled compared with last year, but still remain at a level when companies can drill profitably.
Cenovus also said it plans to expand production at its Foster Creek, Christina Lake and Sunrise oil sands projects.
The company forecast total upstream production for 2024 between 770,000 and 810,000 barrels of oil equivalent per day (boepd), compared with 775,000 boepd to 795,000 boepd expected this year.
TMX Group Ltd. (X-T), the owner of the Toronto Stock Exchange, was flat after it said on Wednesday it had acquired an around 78-per-cent stake in U.S. data analytics company VettaFi Holdings for US$848-million ($1.14-billion Canadian).
In January, the group took a 21-per-cent stake in the New York City-based firm, which values the total deal at US$1.03-billion.
The deal will be financed through bank debt of up to US$1-billion in term loans, and will add to TMX’s adjusted earnings per share in the first year of the deal, excluding synergies, the company said in a statement.
“From a strategic standpoint, this acquisition accelerates TMX’s long-term global expansion, and increases the proportion of revenue derived from our Global Solutions, Insights and Analytics division, and from recurring sources,” said John McKenzie, CEO of TMX Group. As part of the deal, the operator will also assume US$100-million of VettaFi’s debt.
VettaFi provides a database of exchange-traded funds (ETFs), analytics and indices, and the exchange operator’s analytics business.
Cineplex Inc. (CGX-T) was higher by 0.7 per cent after saying November brought box office revenues of $35 million as Canadians came out to watch the likes of The Marvels and the latest Hunger Games movie.
The Toronto-based company says the results compared with box office revenues of $52 million during the same month in 2019, and were slightly lower than October’s numbers.
Andrew Willis: Where does Cineplex fit in a streaming world?
Cineplex says lower business volumes are expected in the near term due to the impacts of the Hollywood strikes.
The company also announced it has entered into a credit facility extension with its lenders.
It says strong results in the second and third quarters have allowed it to pay down approximately $55 million under its credit facilities.
Cineplex says that net proceeds from the recently announced sale of Player One Amusement Group, expected to close in the first quarter of 2024, will help it pay down further debt.
Calgary-based Westbridge Renewable Energy Corp. (WEB-X) surged 15.4 per cent with the close of its $47.56-million sale of its Vulcan County, Alta. solar power plant project to a subsidiary of Greece’s Mytilineos SA.
Mytilineos is backed by Toronto’s Fairfax Financial Holdings Ltd., which owns a 4.7-per-cent stake, making it the second-biggest shareholder.
Greek company Mytilineos to launch Canada’s largest solar farm in Alberta
“This marks a pivotal milestone in the progress of our company as it is the company’s first project being monetized, realizing our strategic vision,” said Westbridge CEO Stefano Romanin. “It stands as a testament not only to our team’s dedication but to the solid business model executed over the past few years.”
Moderna (MRNA-Q) gained over 9 per cent and Merck & Co. (MRK-N) dipped 1.1 per cent after their experimental messenger RNA cancer vaccine paired with Merck’s Keytruda cut the chance of recurrence or death from melanoma by half after three years, showing that benefits demonstrated a year ago have held up over time.
The combination of the personalized cancer vaccine and Merck’s blockbuster immunotherapy cut the risk of recurrence or death of the most deadly skin cancer by 49 per cent compared with Keytruda alone in the midstage trial, the companies said.
The results come at a median point of three years into the study involving 157 patients with stage III/IV melanoma whose tumors were surgically removed before being treated with either the drug/vaccine combination or Keytruda alone with the aim of delaying disease recurrence.
A year earlier, the study had shown a 44-per-cent reduction of recurrence or death.
“The durability of the responses is really strong, they’re essentially rock solid through this time,” Moderna President Stephen Hoge said in an interview. “This is a pretty significant improvement, a pretty dramatic improvement over standard of care with just Keytruda alone.”
The combination treatment has won U.S. breakthrough therapy and European Medicines Agency PRIME scheme designations, regulatory programs that aim to speed development of innovative treatments. Still, Hoge said that even with the new data it would be some time before the companies can file for approval of the treatment.
The vaccine is custom-built based on an analysis of a patient’s tumors after surgical removal. The vaccines are designed to train the immune system to recognize and attack specific mutations in cancer cells.
They have already begun a comfirmatory late-stage trial for the combination in melanoma, as well as one in non-small cell lung cancer that is already enrolling patients.
Occidental Petroleum Corp. (OXY-N) rose 2.7 per cent after a filing at the U.S. Securities and Exchange Commission revealed Warren Buffett’s Berkshire Hathaway (BRK.B-N, BRK.A-N) has acquired nearly 10.5 million shares so far this week for about US$588.7-million.
The purchases bring Berkshire’s stake in Occidental to about 27 per cent. The company also holds preferred shares and warrants to acquire another 83.8 million Occidental shares for US$4.7-billion, or US$56.62 apiece.
The shares and warrants were obtained as part of a deal that helped Occidental finance its 2019 purchase of Anadarko Petroleum. If exercised, the warrants would bring Berkshire’s total ownership to 33 per cent.
Berkshire last bought Occidental shares on Oct. 25 and acquired a 25.8-per-cent stake worth approximately US$14.4-billion.
Berkshire owns dozens of businesses including several energy operations, the BNSF railroad and Geico car insurance, and hundreds of billions of dollars of stocks including Apple.
On the decline
Pembina Pipeline Corp. (PPL-T) was lower by 3 per cent after it said on Wednesday it would buy Enbridge Inc.’s (ENB-T) interests in the Alliance Pipeline, Aux Sable and NRGreen joint ventures for $3.1-billion.
Alliance delivers liquids rich natural gas sourced in Northeast B.C., Northwest Alberta and the Bakken region to Chicago.
Aux Sable operates natural gas liquids (NGL) extraction and fractionation facilities in both Canada and the U.S., with extraction rights on Alliance, offering connectivity to key U.S. NGL hubs.
Pembina would assume $327-million of debt as part of the deal, helping Enbridge offload some leverage.
Investors fretted over Enbridge’s debt load from the $14-billion bid for three of Dominion Energy’s natural gas distribution companies in September.
“The sales proceeds will fund a portion of the strategic U.S. gas utilities acquisitions and be used for debt reduction,” Enbridge said in a separate statement.
Pembina added the deals are expected to be completed in the first half of 2024.
Pembina currently owns 50 per cent of the equity interests in Alliance, Aux Sable’s Canadian operations and NRGreen.
It also owns about 42.7 per cent of the equity interests in Aux Sable’s U.S. operations.
Sobeys parent company Empire Co. Ltd. (EMP-A-T) dropped 11.2 per cent after it reported sales and earnings growth in its grocery business in the second quarter, while income from investments and other operations led to an overall decline in profits.
The Stellarton, N.S.-based retailer reported on Thursday that net earnings fell to $181.1-million or 72 cents per share in the quarter ended Nov. 4, compared to $189.9-million or 73 cents per share in the same period last year.
Empire recorded a $20.6-million insurance recovery related to a cybersecurity breach that hit the company last November. It also recorded $16.8-million in restructuring costs related to a plan to improve efficiencies in the company. Not including those items, adjusted net earnings were lower, at $178.3-million or 71 cents per share. Both sales and adjusted earnings per share came in below analysts’ estimates for the quarter.
The company, which owns chains including Sobeys, Safeway, IGA and FreshCo, reported that both sales and profits were up in its grocery operations, with net earnings in the food retailing segment rising 8.5 per cent to $171.5-million. Income from its investments and other operations declined, mostly because fewer property sales led to lower equity earnings from Empire’s interest in Crombie Real Estate Investment Trust.
- Susan Krashinsky Robertson
Transat AT Inc. (TRZ-T) dipped 3 per cent despite logging a profit in its latest quarter, which marked a sharp improvement from its loss a year ago as the travel company continued to ramp up flights.
On Thursday, the Montreal-based carrier reported net income of $3.2-million for the three months ended Oct. 31 compared with a loss of $126.2-million in the same period last year.
Higher prices to European destinations helped drive a one-third jump in revenues year over year. The $764.5-million in sales for the quarter, up from $573.1-million a year ago, also sat 10 per cent above 2019 levels despite there being seven per cent less capacity and a similar percentage of seats filled, Transat said.
“Driven by a strong execution of its strategic plan, Transat has solidified its positioning in the Canadian leisure travel industry,” Transat CEO Annick Guerard said.
“As industry dynamics gathered momentum throughout the year, our team focused on meeting growing demand and improving operating efficiency, allowing us to end fiscal 2023 with financial results that exceeded the upper range of our profitability target.”
Even as Canadians splurge on leisure more reluctantly amid higher interest rates and inflation, Transat plans to increase flight capacity by 19 per cent next year through more airplanes and better “fleet utilization.” The planes will be put toward greater frequency on some routes, year-round service on others as well as some new destinations, the company said.
In its coming financial year, Transat is targeting a profit margin between 7.5 per cent and nine per cent for earnings before interest, taxes, depreciation and amortization, exceeding historical levels.
In a separate announcement, Transat said it has signed a deal to sell its 50-per-cent stake in the Marival Armony Luxury Resort near Puerto Vallarta in Mexico to its co-owner, the owner of the Marival Group, for US$15.5 million. Proceeds from the sale will be used to repay debt.
On Thursday, the tour package company reported its profit amounted to eight cents per share for its fourth quarter compared with a loss of $126.2-million or $3.32 per share in the same quarter last year.
On an adjusted basis, Transat said it earned 41 cents per share last quarter versus an adjusted loss of $2.00 per share a year ago.
Aeterna Zentaris Inc. (AEZS-T) slid and Ceapro Inc. (CZO-X) jumped after the Canadian pharmaceuticals companies announced a definitive agreement to combine operations in an all-stock merger of equals.
The combined company is expected to be listed on the Nasdaq and TSX, subject to the receipt of all necessary approvals. A new name is expected to be announced in the coming weeks with the transaction expected to close in the first quarter of 2024.
“The combination is attractive for shareholders of both companies, as it is expected to create a long-term sustainable business, which is optimally positioned to deliver value as the biopharma sector recovers from its current levels,” they said in a release.
Photoshop maker Adobe Systems Inc. (ADBE-Q) said late Wednesday it was facing regulatory scrutiny over its subscription models and forecast annual and quarterly revenue below estimates, sending its shares down.
The San Jose, Calif.-based company said in a regulatory filing that since June 2022 it has been cooperating with the Federal Trade Commission (FTC) in response to a civil investigative demand seeking information regarding its disclosure and subscription cancellation practices.
“In November 2023, the FTC staff asserted that they had the authority to enter into consent negotiations to determine if a settlement regarding their investigation of these issues could be reached,” Adobe said, adding that it is currently holding discussions with the FTC.
The company added that this matter could involve significant monetary costs or penalties and could have a material impact on its financial results and operations.
Adobe’s US$20-billion buyout of cloud-based designer platform Figma has also been probed by Britain’s competition regulator.
The company said on Wednesday the European Commission has provided a preliminary statement of objections and the Competition and Markets Authority has issued provisional findings of competition concerns.
“We strongly disagree with these findings and are responding to the respective regulators,” Adobe said.
The company forecast revenue in the range of US$5.10-billion to US$5.15-billion for the current quarter. Analysts on average were expecting US$5.19-billion, according to LSEG data.
Its revenue forecast for fiscal 2024 was in the range of US$21.30-billion to US$21.50-billion, which also came in below estimates.
The company hiked prices for some of its offerings starting November, further hurting demand.
The company reported a fourth-quarter adjusted profit of US$4.27 per share, compared with estimates of US$4.14.
Its revenue for the three months ended Dec. 1 was marginally above estimates.
With files from staff and wires