A survey of North American equities heading in both directions
On the rise
Shares of Manulife Financial (MFC-T) rose 1.4 per cent on news it will reinsure $5.4-billion of its reserves as it looks to transfer some risk from its portfolio and free up capital for stock buybacks.
The agreement with Reinsurance Group of America covers $2.4-billion of long-term care reserves, Manulife said on Wednesday.
Long-term care insurance is considered a high-risk business as it involves coverage for people with chronic or disabling conditions who need constant care, typically found in individuals over 65.
Insurers maintain reserves to pay out claims by policyholders. By reinsuring those reserves, they can transfer some of those obligations and unlock capital to underwrite additional policies or return capital to shareholders.
Manulife said the latest deal will free up $800-million of capital for buybacks.
Earlier this year, it had clinched a reinsurance deal with RGA Life Reinsurance Company of Canada for $5.8-billion of reserves.
Nvidia (NVDA-Q) forecast its slowest revenue growth in seven quarters on Wednesday, with the artificial intelligence chipmaker failing to meet lofty expectations of some investors who have made it the world’s most valuable firm.
Shares of the Santa Clara, California-based company rose 0.5 per cent in volatile trading on Thursday.
Expectations ran high ahead of the results, with Nvidia shares up more than 20 per cent over the last two months and hitting an intraday record high on Monday. The stock has nearly tripled so far this year and is up more than ninefold over the last two years, giving it a market value of US$3.6-trillion. Nvidia is in the middle of launching its powerful Blackwell family of AI chips, which will weigh on the company’s gross margins initially but improve over time.
The new line of processors has been embraced by Nvidia’s customers and the company will exceed its initial projections of several billion dollars in sales of the processors in the fourth quarter, Chief Financial Officer Colette Kress told analysts on a conference call on Wednesday. Asked about media reports that a flagship liquid-cooled server containing 72 of the new chips was experiencing overheating issues during initial testing, CEO Jensen Huang said there are no issues and customers such as Microsoft, Oracle and CoreWeave are implementing the systems.
“There are no issues with our Grace Blackwell liquid-cooled systems,”Mr. Huang told Reuters. “The engineering is not easy at all, because what we’re doing is hard, but we’re in good shape.”
Initially its Blackwell family of chips will carry gross margins in the low 70-per-cent range, but will increase to the mid-70-per-cent range when production ramps up, Kress said.
The company forecast revenue of US$37.5-billion, plus or minus 2 per cent for the fourth quarter, compared with analysts’ average estimate of US$37.09-billion according to data compiled by LSEG.
While still a stunning rate of growth thanks to huge demand for the company’s chips that make up the brains of complex generative AI systems, it marks a clear slowdown from previous quarters when Nvidia mostly posted sales that at least doubled.
Nvidia’s fourth-quarter forecast indicated the company’s revenue growth will slow to roughly 69.5 per cent from 94 per cent in the third-quarter.
“Investors have become accustomed to huge beats from this company, but doing that is getting harder and harder,” said Ryan Detrick, chief market strategist at Carson Group. “This was still a very solid report, but the truth is when the bar is this high it makes things just that much tougher.” The slowdown in revenue growth, however, obfuscates enormous demand for the company’s AI chips, which dominate the market.
Data analytics provider Snowflake (SNOW-N) on Wednesday raised its annual product revenue forecast and said it has teamed up with AI firm Anthropic to build up its cloud services, sending its shares surging 32.7 per cent.
Snowflake’s data cloud has been seeing strong adoption from enterprises looking to use artificial intelligence-powered services to organize swathes of data.
Like other tech firms such as Salesforce (CRM-N) and Microsoft (MSFT-Q), Snowflake is also developing AI agents using its Snowflake Intelligence platform. Autonomous agents are considered to be the evolution of a copilot, which can perform routine tasks on behalf of a person.
The company’s multi-year partnership with Anthropic would allow its customers to use the AI firm’s large language models to develop and enhance their own AI applications.
With Anthropic’s technology, Snowflake’s AI agents will be able to deeply analyze data and generate visualizations, among other functions.
“Our partnership with Snowflake enables enterprises of any size and industry to access our most advanced models within their secure data environment,” said Michael Gerstenhaber, vice-president of product at Anthropic.
Analysts have also been watching how Snowflake’s new CEO can pivot it into an AI software firm that can leverage the booming technology amid stiff competition.
Snowflake expects product revenue of US$3.43-billion for 2025, compared with its previous forecast of US$3.36-billion.
The company forecast its fourth-quarter product revenue to be between US$906-million and US$911-million, above analysts’ estimate of US$884.5-million, according to data compiled by LSEG.
Total revenue for the third quarter was US$942.1-million, surpassing estimates of US$897-million. Quarterly product revenue of US$900.3-million also beat expectations.
On an adjusted basis, the company earned 20 US cents per share, compared with the estimates of 15 US cents.
Deere & Co. (DE-N) increased over 8 per cent even though it forecast lower-than-expected 2025 profit on Thursday, as slumping farm incomes and inflationary pressures affect demand for the company’s tractors and other agricultural equipment.
A decline in farm incomes, high interest rates and an uncertain economy have compelled farmers to reassess large expenses on agricultural machinery and forced dealers to limit inventory restocking.
U.S. farm income is expected to fall for a second consecutive year in 2024, as farmers grapple with corn and soybean prices hovering near four-year lows.
“Amid significant market challenges this year, we proactively adjusted our business operations to better align with the current environment,” CEO John May said.
For 2025, Deere expects net sales to fall about 10 per cent to 15 per cent across all its machinery segments.
A slump in equipment volumes has also forced smaller rivals CNH Industrial and AGCO to trim their profit expectations for the rest of 2024.
The world’s largest farm-equipment maker expects profit for fiscal year 2025 in the range of US$5-billion to US$5.5-billion, compared with analysts’ average estimate of US$5.93-billion, according to data compiled by LSEG.
Concerns around supply chains and a surge in demand led dealers to significantly increase their inventories last year, boosting sales for Deere.
However, amid the recent demand slowdown, skeptical dealers have slowed inventory restocking.
“As expected, farmers are pulling back on equipment purchases, given the growing P&L pressure, and that is reflected in Deere’s results and guidance for 2025,” said Chad Dillard, senior analyst at Bernstein.
“It is encouraging Deere is managing channel inventories and defending price.”
The company reported a profit of US$4.55 per share for the fourth quarter ended Oct. 27, above Wall Street expectations of US$3.87, aided by lower production expenses and cost controls, sending its shares up.
Palo Alto Networks (PANW-Q) beat Wall Street expectations for first-quarter revenue and profit on Wednesday, owing to healthy spending for its cybersecurity services amid a rise in digital threats.
Shares of the Santa Clara, California-based company rose 1.2 per cent. Palo Alto forecast second quarter as well as annual revenue largely in line with analysts’ expectations.
The company also announced a two-for-one stock split of its outstanding shares of common stock. Trading on a split-adjusted basis is expected to begin on Dec. 16.
Palo Alto raised its fiscal 2025 revenue outlook to between US$9.12-billion and US$9.17-billion, while analysts expected US$9.13-billion, as per data compiled by LSEG.
A rise in cyber crimes and hacks has spurred companies to invest heavily into cybersecurity, benefiting large firms that provide a wide range of security services, such as Palo Alto.
The company has been attempting to get its clients to adopt a new “platformization” approach to security by consolidating individual tools into one platform and simplifying management.
“Our platformization progress continued in Q1, driving strong financial results,” said Dipak Golechha, Palo Alto’s finance chief.
Palo Alto reported revenue of US$2.14-billion for the first quarter, beating estimates of US$2.12-billion.
On an adjusted basis, the company earned US$1.56 per share, compared with estimates of US$1.48 apiece.
It forecast second-quarter revenue between US$2.22-billion and US$2.25-billion, compared with estimates of $2.23 billion.
The company also raised its forecast for adjusted net income per share to a range of US$6.26 to US$6.39 per share, from US$6.18 to US$6.31 per share it expected earlier.
On the decline
Womenswear retailer Groupe Dynamite Inc. (GRGD-T) has made its Toronto Stock Exchange debut.
The Montreal-based firm behind the Dynamite and Garage stores began trading Thursday under the ticker GRGD.
Shares in the company were priced at $21 in their initial public offering but were down during the day, closing $1.15 lower at $19.85.
The launch comes as the global retail market has been battered by high inflation and interest rates, which have eased but are continuing to weigh on consumers headed into the key holiday season.
Few companies, let alone retailers in Canada, have gone public in the last few years amid such conditions.
Groupe Dynamite has not said what spurred its decision and spokesperson Anne Dongois said in a Thursday email that the retailer was unable to grant interviews during its primary distribution period, which is likely to end Nov. 26.
Liza Amlani, co-founder of the Retail Strategy Group, believes the brand chose to go public to get the cash infusion it needs to fuel future growth.
“Groupe Dynamite going public is an important next step for the brand as it begins to scale at a faster pace,” she said in an email.
Groupe Dynamite got its start in 1975 with a lone store at the Place Versailles shopping mall, but now has a network of about 300 locations across Canada and the U.S. It employs about 6,000 people.
The majority of the stores it has opened since 2022 have been in the U.S. market, which Groupe Dynamite has described as “higher growth.”
It has said it plans to continue growing in the U.S. but is also eyeing other regions such as the U.K.
Going public gives Groupe Dynamite the resources to make their ambitions a reality and reach the coveted generation Z, people born between 1997 to 2012.
“There is an opportunity to open more physical stores in the U.S. that market towards Gen Z, and Dynamite and Garage are exactly what Shein and Temu are not — physical shopping destinations that are trendy,” Amlani said, referencing the company’s online retail rivals, which have grown in popularity in recent years.
Groupe Dynamite’s IPO included more than 14 million subordinate voting shares.
The offering was made through a syndicate of underwriters including Goldman Sachs Canada Inc., BMO Nesbitt Burns Inc., RBC Dominion Securities Inc. and TD Securities Inc.
The sale was expected to generate gross proceeds of about $300 million for the selling shareholders.
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Discount e-commerce player PDD Holdings (PDD-Q) fell short of market estimates for third-quarter revenue and profit on Thursday, as its low prices did not persuade cost-conscious consumers to spend as much as expected on its platforms.
U.S.-listed shares of PDD, which runs the Pinduoduo online shopping site in China and Temu internationally, were down 10.6 per cent in Thursday trading.
Higher unemployment among Chinese youth and a property sector crisis have taken a toll on consumer confidence, holding back sales at Pinduoduo.
Competitors in China, Alibaba (BABA-N) and JD.com (JD-Q), also reported tepid sales growth for their September quarters.
While Pinduoduo has benefited from its low-cost focus, competitive pressure has been increasing with rivals ramping up promotions and discounts, sparking a price war.
“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges,” said Jun Liu, VP of Finance at PDD.
PDD’s revenue jumped 44 per cent to 99.35 billion yuan (US$13.72-billion) for the three months ended Sept. 30. That compared with the 102.65 billion yuan average of 17 analyst estimates compiled by LSEG.
Net income rose to 24.98 billion yuan from 15.54 billion yuan in the same period a year earlier, but the firm reported an adjusted profit of 18.59 yuan per American Depository Share, missing estimates of 19.79 yuan.
Alibaba Group (BABA-N) declined 1.4 per cent after saying in a stock exchange filing it will integrate its domestic Chinese and international e-commerce platforms into a single business unit run by one leader for the first time.
The Alibaba E-commerce Business Group, as the unit will be called, brings together the Taobao and Tmall Group and the Alibaba International Digital Commerce (AIDC) Group.
AIDC groups cross-border player AliExpress, wholesale B2B site Alibaba.com, sourcing platform 1688 and secondhand goods platform Xianyu.
Its chief, Jiang Fan, a former head of Tmall demoted in 2020 after an online scandal, has been tapped to lead the new unit, reporting to Alibaba Group Chief Executive Eddie Wu.
Alibaba split into six business units in 2023, in the biggest revamp of its 24-year history. Prior to this latest amalgamation of two of those groups, Group CEO Wu had also been CEO of the Taobao and Tmall Group and Alibaba’s cloud division.
Alibaba’s e-commerce platforms have been under pressure both at home and abroad as aggressive new players such as PDD Holdings’ Chinese platform Pinduoduo and international site Temu, along with ByteDance’s domestic Chinese Douyin and international TikTok, gain market share selling low-cost goods.
With files from staff and wires