A survey of North American equities heading in both directions
On the rise
Rogers Communications (RCI.B-T) added fewer-than-expected wireless subscriptions in the fourth quarter, the company said on Thursday, amid an intense pricing war between rivals and lower immigrations.
The company added 69,000 monthly bill-paying wireless phone subscribers during the quarter, compared with estimates of 72,380, according to analysts polled by Visible Alpha.
Shares of Rogers closed flat in volatile trading.
Amid intense competition in Canada’s wireless industry, BCE and Telus lowered prices for wireless and wireline broadband to put pressure on Rogers and Quebecor , which has led to a price war.
Canada is also undergoing a notable shift in policy, welcoming less immigrants and international students in the country than it historically has. This has impacted demand, as carriers have relied on newcomers to expand its customer base.
Rogers reported an adjusted profit of $1.46 per share for the fourth quarter, beating analysts’ estimates of $1.36 per share, according to data compiled by LSEG.
Its revenue stood at $5.48 billion, while analysts were expecting $5.4=billion.
In October, Rogers entered into a $7-billion equity-financing deal with an unnamed investor — believed to be Blackstone — to sell a minority stake in some of the infrastructure it owns.
A difficult operating environment and strained balance sheet made Rogers mull selling a part of its infrastructure to reduce its $38.2-billion long-term debt, as of Dec. 31.
Rogers missed its deadline of closing the deal by the end of the fourth-quarter. CFO Glenn Brandt said in an analyst call that the deal is complex, progress has been made and they have “work to do.”
Neither he or CEO Tony Staffieri provided a new deadline for the deal closure, but Brandt said Rogers has “many options” available to reduce debt.
In a research note, Desjardins Securities analyst Jerome Dubreuil said: “This morning, RCI reported an overall neutral update, with decent 4Q financials and a mixed 2025 guidance which featured an adjusted EBITDA guidance miss of 1 per cent, but a beat on FCF. We believe the recent share price weakness means there will be a muted reaction to this morning’s update. The company achieved its target of returning to cable top-line growth, albeit by a very small margin. RCI did not provide an update on its infrastructure deal in the press release, only mentioning that ‘work continues on prospective $7-billlion structured equity investment’. Its leverage remains elevated at 4.5 times.”
Shares of Canadian Pacific Kansas City Ltd. (CP-T) rose 1.7 per cent after it reported a jump in profits in its latest quarter amid higher revenue from grain and auto shipments, even as container cargo slumped.
The country’s second biggest railway said its net income rose 18 per cent to $1.20-billion in the three months ended Dec. 31 from $1.02-billion in the same period a year earlier.
CPKC head says railway can withstand a trade war ignited by Trump
Grain revenues rose 12 per cent year-over-year and revenue from energy, chemicals and plastics increased three per cent, the Calgary-based company said. The two segments comprised 44 per cent of CPKC’s freight revenues.
Revenue from container shipments fell six per cent due to weaker consumer demand amid the hangover from inflation and higher interest rates.
“Our team finished our first full year as a combined company strong, with volume growth, improved safety performance and solid operational execution that allowed CPKC to deliver industry-leading earnings growth in 2024,” said chief executive Keith Creel in a release.
The company’s efficiencies — profits rose far more than revenues — stemmed partly from Canadian Pacific’s takeover of Kansas City Southern in December 2021. The acquisition marked North America’s first major rail merger in decades, but operations merged only in April of 2023 following regulatory approval of the deal.
Due largely to CPKC’s continent-wide network — none of North America’s five other major railways span all three countries — sales from automotive shipments soared by 38 per cent year-over-year, topping company records, the company said.
CPKC’s said fourth-quarter revenues rose three per cent to $3.87 billion from $3.78-billion the year before.
Diluted earnings increased to $1.28 per share from $1.10 per share, beating analysts’ expectations.
Earlier Wednesday, the board declared a quarterly dividend of 19 cents per share payable on April 28.
Reaction from the Street: Thursday's analyst upgrades and downgrades
Shares of Celestica Inc. (CLS-T) gained over 14 per cent after the late Wednesday release of better-than-expected fourth-quarter results and a raise to its 2025 guidance.
The Waterloo, Ont.-based company reported quarterly adjusted earnings per share of US$1.11, up from 65 US cents a year ago and topping the Street’s forecast of US$1.06 as revenue rose 19 per cent from fiscal 2023.
It now projects full-year revenue of US$10.7-billion, an increase from a previous outlook of US$10.40-billion, and non-GAAP adjusted EPS of US$4.75, rising from US$4.42.
“Solid results and an upbeat guidance revision are likely to support the continued recovery in the share price,” said TD Cowen analyst Daniel Chan in a note. “Strong Communications performance is expected to continue throughout the year, supporting our main thesis. We are also encouraged by continued 2026 program wins. 2025 EPS guidance raised to $4.75 likely exceeds buy side’s expectations and our Street-high $4.58.”
Shell Canada Ltd. is exiting the oilsands in a deal with Canadian Natural Resources Ltd. (CNQ-T) in an agreement that will see it increase its stake in the Scotford upgrader and Quest Carbon Capture and Storage facility.
Shares of CNQ were higher by 1.5 per cent on the premarket announcement.
Shell is swapping its remaining 10-per-cent stake in the Albian mines in exchange for a 10-per-cent interest in the Scotford upgrader and Quest CCS facility.
The deal will boost Shell’s interest in the upgrader and carbon capture facility to 20 per cent.
Shell is the operator of the Scotford upgrader and Quest CCS facility, located next to the Shell-owned Scotford refinery and chemicals plants near Edmonton.
The swap stems from a provision in a 2017 deal involving the Athabasca Oil Sands Project. The transaction is subject to regulatory approvals and is expected to close in the first half of this year.
Shell’s Canadian assets include a 40-per-cent stake in LNG Canada, upstream operations in northeast B.C. and northwest Alberta as well as 1,400 Shell-branded sites across the country.
U.S.-listed shares of Shell (SHEL-N) rose after it reported a 16-per-cent drop in profit for 2024 on Thursday amid weakness in oil and gas prices and in demand, but raised its dividend by 4 per cent.
The oil major also announced a US$3.5-billion share buyback for the current quarter, making this the 13th consecutive quarter of at least US$3-billion of share repurchases.
Its shares gained even as the group reported that its 2024 adjusted earnings, its definition of net profit, fell to US$23.72-billion from US$28.25-billion in 2023, dented by narrower liquefied natural gas (LNG) trading margins, lower oil and gas prices, and weaker refining margins.
That fell short of a US$24.64-billion consensus compiled by LSEG and US$24.11-billion forecast by analysts polled by Vara Research.
Chartwell Retirement Residences (CSH.UN-T) was up 1.5 per cent after it signed a deal to buy a retirement residence complex in Montreal for $136-million.
Under the deal, Chartwell will acquire Rosemont Les Quartiers, which includes several connected buildings, just east of downtown Montreal.
The deal includes a total of 632 rental suites that offer a range of preferences and care needs.
Under the agreement, Chartwell will pay $130-million at closing and make a deferred payment of $6-million in three years.
The sale is expected to close in the first quarter of this year.
Chartwell is one of the Canada’s largest operators of retirement homes.
Tesla Inc. (TSLA-Q) shares gained 2.9 per cent on Thursday after CEO Elon Musk vowed to launch long-awaited cheaper models in the first half of 2025 and start testing an autonomous ride-hailing service in June.
The promises helped investors overlook a weak fourth quarter that saw margin shrink and revenue drop below expectations as a result of slow model upgrades and rising competition.
Doubts over Tesla’s auto business gained ground after it ended 2024 with its first annual decline in deliveries, despite margin-sapping cheaper financing options and price cuts.
Tesla said on Wednesday it expected the vehicle business to return to growth this year, but did not repeat Mr. Musk’s prediction from late last year that sales would grow 20 per cent to 30 per cent in 2025.
“The results are emblematic of a company in the transition from an automotive ‘pure play’ to a highly diversified play on AI and robotics,” Morgan Stanley analysts said.
Tesla shares have rallied recently on hopes that U.S. President Donald Trump, whose election campaign Mr. Musk had backed with around a quarter-billion dollars in donations, would provide a clearer regulatory path for its robotaxis.
Mr. Musk said Tesla would start unsupervised tests of its autonomous ride-hailing service in Austin, Texas. He did not provide details either on how the service would work or his affordable vehicle plans, including pricing.
The stock ended last year with a gain 62.5 per cent and trades at 118 times its 12-month forward earnings estimates, compared with Ford’s 6.07, and GM’s 4.48.
At least 19 brokerages have raised their target price for the stock, with a median PT of US$300 compared with US$278 at the end of December.
“Tesla investors are fueled by optimism around Full Self-Driving and the upcoming affordable model - two key catalysts that could drive Tesla’s next leg of growth,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
While Tesla’s plan to test its robotaxi is a positive, some analysts questioned the timeline given by Mr. Musk due to heavy regulatory scrutiny.
“He (Musk) highlighted improvements in Tesla’s software, with planned rollouts in Texas and California, though regulatory barriers in Europe and data restrictions in China continue to slow progress,” said Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.
Tesla on Thursday also raised its capital expenditure forecast to exceed US$11-billion this year and in the next two fiscal years.
IBM (IBM-N) surpassed fourth-quarter profit estimates on Wednesday, driven by robust demand in its software unit as businesses ramped up IT spending, sending the company’s shares soaring 13 per cent.
The software segment recorded its biggest revenue jump in five years, as customers prioritized spending on cloud infrastructure amid a rush to adopt the data-intensive generative artificial intelligence technology.
“When you see more growth come from software, that comes with a lot better margins,” said Matt Swanson, analyst at RBC Capital Markets.
IBM also forecast revenue growth of at least 5 per cent at constant currency for fiscal 2025, higher than the 3-per-cent increase seen in 2024.
This suggests “confidence in (IBM’s) AI and cloud strategy,” said Michael Schulman, chief investment officer of Running Point Capital.
IBM’s AI Book of Business — a combination of bookings and actual sales across various products — stood at more than US$5-billion inception-to-date, up about US$2-billion from the third quarter.
The company made its “Granite” family of AI models open-source in May, in contrast to rivals such as Microsoft , which charge for access to their models.
IBM’s approach is in line with Chinese startup DeepSeek, which last week launched a free AI assistant that it said uses less data at a fraction of the cost of incumbent services, fueling concerns over the dominance of U.S. tech.
“DeepSeek was an initiation that open (source) AI can play a role in the overall GenAI space,” IBM Chief Financial Officer James Kavanaugh told Reuters in an interview.
He, however, declined to provide details on whether IBM plans to offer DeepSeek’s models on its Watsonx platform, which helps users in tasks such as deploying chatbots.
Total revenue was relatively flat at US$17.55-billion for the quarter and largely in line with analysts’ estimates, according to data compiled by LSEG.
IBM’s fourth-quarter adjusted per-share earnings of US$3.92 compared with estimates of US$3.75.
Mastercard (MA-N) reported a higher fourth-quarter profit on Thursday as a resilient economy encouraged consumers to ramp up spending during the holiday season, sending the company’s shares up 3.1 per cent.
Spending continues to be underpinned by a solid labor market and wage growth that have spurred consumer confidence, while retailers also offered discounts to attract budget-conscious shoppers during the holiday season between Thanksgiving and Christmas.
Mastercard’s gross dollar volume, the value of all transactions processed on the company’s platform, rose 12 per cent in the fourth quarter.
Cross-border volume, which tracks spending on cards outside of the country of their issue, jumped 20 per cent.
Mastercard has a more balanced global exposure compared with its peers, with the company benefiting from continued stability in volume growth, analysts have said.
The company has also focused on bolstering its value-added services such as fraud protection to diversify its business model.
Revenue from the company’s value-added services and solutions unit rose 17 per cent in the fourth quarter. Mastercard’s net revenue increased 16 per cent to US$7.49-billion.
The company forecast 2025 net revenue to increase in the low double-digits percentage range, compared with the average analyst estimate of 12.7-per-cent growth, according to data compiled by LSEG.
Mastercard’s net income rose to US$3.34-billion, or US$3.64 per share, in the three months ended Dec. 31, compared with US$2.79-billion, or US$2.97 per share, a year earlier.
Mastercard’s shares jumped 23.5 per cent in 2024, outperforming rival Visa’s 21.4-per-cent gain. Last month, Mastercard unveiled a US$12-billion share repurchase program.
Visa (V-N), the world’s largest payments processor, will report earnings later in the day.
On the decline
Investors punished Microsoft (MSFT-Q) on Thursday as hefty AI bets failed to drive a big increase in its cloud revenue, while Meta (META-Q) rose after CEO Mark Zuckerberg assured Wall Street about growth with promises of a “really big year.”
The chief executives of both the companies defended their heavy investments on artificial intelligence on Wednesday, days after Chinese upstart DeepSeek unveiled a breakthrough in cheap AI that shook the technology industry.
But while Meta has consistently showed strong ad revenues - a move that “easily justifies” its investments according to Evercore analyst Mark Mahaney - Microsoft’s key cloud business Azure has been slowing down.
The Windows maker missed market estimates for quarterly revenue growth at Azure and gave a third-quarter forecast for the business that was below expectations, even after it promised a rebound for the unit in the second half of its fiscal year.
“The second-half re-acceleration story for Azure is not playing out,” Barclays analyst Raimo Lenschow said.
“The company overly focused on AI workloads at the expense of core Azure. It will take time to fix this, which means the Azure growth acceleration the market had been hoping for has to wait for a little longer.”
For Facebook-parent Meta, a better-than-expected 21-per-cent jump in revenue helped ease investor fears around Zuckerberg’s plans to spend as much as US$65-billion this year on AI, even as its first-quarter forecast was muted.
“Nobody is more bulled up on AI than Meta. And Meta might have more benefits to show from AI than anyone,” Rosenblatt analyst Barton Crockett wrote.
At least 15 brokerages raised their price targets on Meta, which has a 12-month forward price-to-earnings ratio of about 26.22. The stock jumped 65 per cent last year, the biggest gain among Big Tech peers.
“Meta’s ability to use AI to sustainably drive both engagement and pricing growth is a rarity in its (and the industry’s) history,” MoffettNathanson analysts said.
Microsoft was on track to erase about US$182-billion off its US$3.29-trillion market cap. About four brokerages trimmed their price targets on the stock, which has lagged its peers with just a 12-per-cent gain last year.
Microsoft “did not recommit to (its Azure second-half outlook) the same way that it did 90 days ago. The Azure-acceleration story has been hit by shrapnel and is losing altitude,” J.P. Morgan analyst Mark Murphy said.
United Parcel Service (UPS-N) on Thursday forecast downbeat 2025 revenue as it cuts back deliveries for its largest customer, Amazon, in an already challenging environment for the parcel delivery giant.
Shares of UPS plummeted over 14 per cent after the company, without naming Amazon, said it had reached an agreement with its “largest customer” to cut transported volumes by more than 50 per cent by the second half of next year.
The move surprised some analysts and comes during a difficult period for UPS as the company grapples with persistent weakness in parcel demand post-pandemic and a flood of low-profit shipments from bargain e-commerce sellers such as Temu and Shein.
Amazon and its affiliates accounted for about 11.8 per cent of UPS’s overall revenue in 2023.
“The agreement with Amazon to reduce volumes by more than 50 per cent in 18 months is a surprise and acceleration of the glide down of this business that has long represented a tail risk,” Evercore ISI analyst Jonathan Chappell said in a note.
Still, UPS said carrying less freight for Amazon will eventually boost its revenue per piece.
“We are making business and operational changes that, along with the foundational changes we’ve already made, will put us further down the path to becoming a more profitable, agile and differentiated UPS,” said CEO Carol Tome.
The parcel delivery giant said it was reconfiguring its U.S. network, and launching multi-year efficiency initiatives that would result in savings of about US$1-billion.
UPS forecast 2025 revenue of US$89-billion, compared with analysts’ average estimate of US$94.88-billion, according to data compiled by LSEG.
It also forecast full-year consolidated operating margin at 10.8 per cent, an increase from the 9.8 per cent it reported for 2024.
UPS reported an adjusted profit of US$2.75 per share for the quarter ended Dec. 31, beating estimates of US$2.53 per share.
Blackstone (BX-N) dipped 4.1 per cent after it trounced Wall Street estimates for fourth-quarter profit on Thursday, fueled by a pickup in dealmaking, while the assets under management at the world’s largest alternative investment firm reached a record US$1.13-trillion.
Lower interest rates, Donald Trump’s victory in the U.S. presidential election and easing economic uncertainty have powered a global resurgence in deals, with North America leading the activity in recent months.
Blackstone’s fee-related earnings jumped 76 per cent to a quarterly record of US$1.84-billion.
“Earnings growth accelerated sharply, while the key drivers of our business – inflows, investment activity and realizations – all reached their highest levels in two-and-a-half years,” CEO Steve Schwarzman said. “As we move forward in 2025, the firm is exhibiting significant momentum.”
Blackstone’s distributable earnings surged 56 per cent to US$2.2-billion, or US$1.69 per share, in the three months ended Dec. 31 compared with US$1.4-billion, or US$1.11 per share, a year earlier.
Analysts had expected US$1.46 apiece, according to data compiled by LSEG.
Leveraged finance activity is expected to rebound this year as borrowing costs decline, enabling private equity firms to finance deals cheaply and complete more acquisitions.
Some of the world’s largest buyout firms, including Blackstone, have begun pursuing large leveraged acquisitions as the financing outlook improves.
Blackstone said fourth-quarter inflows were US$57.5-billion, bringing full-year inflows to US$171.5-billion. It deployed US$41.6-billion in capital in the quarter.
Lower rates are also expected to boost corporate earnings and real-estate valuations, enhancing exit opportunities and deal flow across broader markets.
Caterpillar (CAT-N) warned of a slight sales drop in 2025 as dealers scale back purchase of equipment due to weak demand driven by high borrowing costs and persistent inflation, sending its shares down 4.6 per cent on Thursday.
The company, which is viewed as a bellwether for global economic growth, also said it expects adjusted operating profit margin in the first quarter to be lower than a year ago.
Contractors are adopting a wait-and-see approach to buying new machinery against the backdrop of growing uncertainty over government spending under the Trump administration.
The initial surge in demand from government projects under former President Joe Biden’s 2021 infrastructure law, a US$1-trillion push to upgrade roads and bridges, has also tapered off.
Sales in Caterpillar’s construction industries segment fell nearly 8 per cent to US$6-billion. China’s struggling real estate market has also weighed on infrastructure spending, leading to a decline in its sales in the region over the past quarters.
The company does not provide a financial forecast but rather comments on its expectations.
Higher borrowing costs, the Federal Reserve’s cautious pace of interest-rate cuts and persistent inflation have also compelled dealers to scale back purchases to better align with demand trends.
For the fourth quarter, Caterpillar reported an adjusted profit of US$5.14 per share, beating expectations of US$5.02, benefiting from lower manufacturing costs and strong pricing in its energy and transportation segment.
eshaSrr files from staff and wire