A survey of North American equities heading in both directions
On the rise
Clothing retailer Groupe Dynamite Inc. (GRGD-T) was up 0.5 per cent on Tuesday after saying it earned $40.4-million in its third quarter, up from $34.9-million in the same quarter last year.
Chief executive and chair Andrew Lutfy says that following a strong summer season, the company’s momentum continued into the third quarter with strong revenue and comparable store sales growth.
The company, which made its debut on the Toronto Stock Exchange last month, says the profit amounted to 38 cents per diluted share for the quarter ended Nov. 2, up from 32 cents per diluted share a year earlier.
Revenue for the quarter totalled $258.8-million, up from $220.1-million in the same quarter last year.
Comparable store sales growth for the quarter amounted to 10.1 per cent.
On an adjusted basis, Groupe Dynamite says it earned 41 cents per diluted share, up from an adjusted profit of 33 cents per diluted share a year earlier.
In a research note, TD Cowen analyst Brian Morrison said: “Groupe Dynamite reported Q3/F24 results toward the high-end of its key metric guidance, that in turn exceeded our forecast. This includes strong year-over-year revenue growth and EBITDA margin expansion, detailing the positive impact of its transformation/growth strategy. Should GDI develop a track record of meeting/exceeding its growth outlook, this should result in multiple expansion in our view.”
Meanwhile, following Monday’s flurry of initiations, two more analysts started coverage of the Montreal-based fashion retailer on Tuesday.
Pfizer (PFE-N) on Tuesday forecast 2025 profits roughly in line with Wall Street expectations, offering some relief to investors after a tumultuous year during which it attracted criticism from activist hedge fund Starboard Value.
Shares of Pfizer rose 4.6 per cent after the drugmaker also said it was expecting 2025 sales of its COVID-19 vaccine and drug to be consistent with 2024 levels.
The company expects adjusted profit of US$2.80 to US$3 per share, compared with analysts’ average estimate of US$2.88 per share, according to data compiled by LSEG.
Pfizer has been reining in costs and shedding non-core businesses to pay down debt as it rebuilds itself after a sharp slump in sales of COVID-19 products.
Its shares have fallen nearly 12 per cent this year and trade at less than half their value during the peak of the COVID-19 pandemic.
That has left it open to investor criticism, with Starboard in October saying that Pfizer’s management has over-spent on big acquisitions and failed to produce profitable new drugs from those deals or from its internal research and development.
“While we see several assets in Pfizer’s pipeline (particularly in oncology) that could make the story more interesting, we believe that further advancement ... will be necessary to change the current narrative on shares which would primarily occur 2026+,” JP Morgan analyst Chris Schott wrote in a research note.
Pfizer forecast 2025 revenue in the range of US$61-billion to US$64-billion, compared with the estimates of US$63.26-billion.
The company also estimated a roughly US$1-billion hit to its revenue from changes to Medicare’s Part D prescription program under President Biden’s Inflation Reduction Act.
Pfizer said the addition of new manufacturer discounts and other changes would more than offset expected benefits from the US$2,000 out-of-pocket spending cap that will be introduced for seniors who have the prescription drug plan next year.
On Tuesday, Pfizer said it does not expect the Trump administration to make major changes to vaccine policy next year even as the president-elect has put forward vaccine skeptic Robert F. Kennedy Jr. as his nominee to run the Department of Health and Human Services.
Pfizer CEO Albert Bourla told analysts at an investor conference that he had met RFK Jr. and Trump for dinner, confirming earlier media reports, and had developed a good relationship with Kennedy.
“If he’s confirmed, we will work with him to make sure that we advance the right policies,” Mr. Bourla said.
Mr. Kennedy has long sown doubts about the safety and efficacy of vaccines that have helped curb disease and prevent deaths for decades. He disputes the anti-vaccine label and has said he would not prevent Americans from getting inoculations. Mr. Trump has said he could end some childhood vaccinations if he thinks they are dangerous.
U.S.-listed shares of Honda Motor Co. (HMC-N) saw gains of almost 1 per cent after the Nikkei newspaper reported it will enter negotiations with Nissan Motor for a merger and join their resources to better compete against bigger global electric vehicle makers.
The two companies are looking to operate under a single holding company and are expected to soon sign a memorandum of understanding for the new merged entity, the report added.
The move comes as tough competition from Chinese EV makers add pressure on legacy brands struggling to make enough profit from their electrified ventures.
Honda and Nissan also look to eventually bring in Mitsubishi Motors, in which Nissan is the top shareholder with a 24-per-cent stake, under the holding company, to create one of the world’s largest auto groups, Nikkei reported.
The stakes of the two companies in the new entity, along with other details are to be decided later, the report said.
Earlier, Honda said it is aiming to double its global hybrid car sales to 1.3 million vehicles annually by 2030 from 2023 levels, providing a “bridge” until fully electric vehicles become more widespread.
From 2026, Honda will start to install new, more fuel-efficient hybrid systems for compact and mid-sized models, revamping engines, platforms and control technologies, the company said.
Demand for gasoline-electric hybrid cars is growing, especially in Honda’s best-selling market North America, amid a slowing expansion of EVs.
EVs face a tougher environment in the United States as President-elect Donald Trump plans to cut support, Reuters has reported.
While Honda is keeping goals to boost EV output to over 2 million by 2030 and sell only EVs and fuel cell vehicles by 2040, it is aiming to upgrade hybrids as a near-term linchpin for the U.S. market, a move similar to rival Toyota.
“Hybrids will serve as a bridge until EVs become fully widespread,” Honda automobile operations chief Katsuto Hayashi told a media briefing.
“Perhaps Toyota’s Prius may come to your mind when you think of hybrids, but I believe we can change the game,” Mr. Hayashi said. He added Honda had no plan to modify its development and investment strategies in response to Trump’s policies.
By using more shared parts across models, Honda will cut costs and double the per-vehicle gross profit for hybrid models at U.S. production sites after 2027, it said.
Sanofi (SNY-Q) and Teva Pharmaceuticals (TEVA-N) surged after they said on Tuesday that their drug, duvakitug, met the main goals in a mid-stage trial when tested in patients with inflammatory bowel disease (IBD).
The drug met the main goals of disease remission and effectiveness for the treatment of ulcerative colitis and Crohn’s disease, respectively.
These are the two most common forms of IBD, which affects between 2.4 million and 3.1 million people in the U.S.
U.S. oil and gas firm Kosmos Energy (KOS-N) walked away from its pursuit of West Africa-focused Tullow Oil on Tuesday, without specifying any reason for the decision, prompting a 10-per-cent drop in Tullow’s shares in London.
Kosmos’ announcement comes less than a week after the companies said they were in early talks for a potential deal that would have created a West Africa-focused producer.
New York-listed Kosmos stock surged 19.2 per cent following the news.
Had the deal gone through, the combined company could have produced more than 130,000 barrels of oil equivalent per day (boepd), based on the two companies’ 2024 forecast, spanning Mauritania, Senegal, Ghana and Equatorial Guinea on Africa’s western coast as well as the U.S. Gulf of Mexico.
“There was logic to considering a transaction given the shared assets in Ghana and scope for operational synergies,” said James Hosie, research analyst at Shore Capital Stockbrokers.
“But any transaction would have required the support of the Ghanaian government and the creditors of both companies, which may have been challenging.”
The two heavily indebted firms are partners in key fields in Ghana.
Kosmos had a deadline of Jan. 9, 2025, to make a firm offer for Tullow. However, it said in a statement it had reserved the right to reconsider its decision under certain conditions.
Tullow said its board remained confident in its standalone business and was “well positioned to optimize its capital structure.”
On the decline
Shares of Air Canada (AC-T) was down 9.4 per cent after it said on Tuesday it was targeting a 36-per-cent jump in its 2028 operating revenue from the current year, riding a wave of strong demand for leisure travel across domestic and international routes.
Airlines worldwide are optimistic about the future of air travel, driven by a post-pandemic surge as travelers shift their priorities from goods to experiences.
Air Canada also forecast its 2025 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of $3.4-billion to $3.8-billion, compared with analysts’ estimates of $3.63-billion according to data compiled by LSEG.
“Our strategy, which builds on and leverages the unique strengths developed over the last decade, is to rise even higher with consistent margin expansion and structural cash generation while maintaining a strong balance sheet and a responsible risk profile,” CEO Michael Rousseau said.
It also plans to expand its network. Earlier this year, the Montreal-based carrier revealed plans to increase flights to China and to add capacity to other Asia-Pacific routes.
The Canadian flag carrier is targeting an operating revenue of about $30-billion in 2028, with an adjusted core profit margin of 17 per cent or greater.
It expects to report an operating revenue of approximately $22-billion this year with a core profit margin of about 16 per cent.
“We believe we are very well positioned to execute our long-term plans,” Mr. Rousseau added.
The airline is expected to provide more details into its future plans at its investor day scheduled for Tuesday.
In a research note, Citi analyst Stephen Trent said: “Air Canada’s overall guidance looks neutral. Management’s medium- and long-term margin expansion guidance looks in-line- to slightly below what rivals Delta and Alaska Air had reported in their recent investor days. While the implied revenue per available seat mile or RASM for 2025 looks flattish (a good sign), the ex-fuel seat mile cost guide for next year is a hair above Citi, while next year’s fuel guide looks a little optimistic vis-a-vis flattish Canadian dollar expectations. Citi has a Buy rating on the shares.”
Dye & Durham Ltd. (DND-T) dropped 7.1 per cent after it entire seven-person board resigned Tuesday and appointed the nominees of Engine Capital LP, hours before an annual meeting that was expected to sweep the dissident investor’s slate into power, ending a year-long battle for the future of the Toronto legal software company.
The company announced that Arnaud Ajdler, the founder of Engine, his five fellow nominees as well as New York hedge fund manager Eric Shahinian – a nominee of the company’s in today’s contested meeting who had been forwarded by another dissident, former chairman Tyler Proud – would be appointed immediately. The meeting will still proceed Tuesday morning.
The slate put forward by Engine was going up against a slate of mostly new directors put forward by the company after a tumultuous year that saw D&D challenged by multiple dissident investors, abandon a sale process, refinance its high debt and face a competition bureau investigation. Embattled chief executive officer Matt Proud, the brother of Tyler Proud, resigned last month but had remained on the company’s board slate. Earlier this month, two influential shareholder advisory services Glass Lewis and ISS both recommended shareholders withhold their support for Mr. Proud and his other nominee to the board, Ted Prittie.
Engine then revealed last Friday that a majority of outstanding shares had already been voted in favour of its nominees. “Shareholders have made their views clear based on preliminary tabulation of proxies,” the company said in a release. “The outgoing board determined that it would therefore be in the best interests of all stakeholders to facilitate a smooth and expeditious turnover of the board.”
- Sean Silcoff
Lion Electric Co. (LEV-T) plummeted 27.4 per cent after confirming it has failed to find new investor backing ahead of a deadline on the expiry of its credit agreements. The manufacturer will therefore file for bankruptcy protection in a bid to restructure.
The Saint-Jérome, Que.-based maker of electric school buses, one of the province’s big industrial hopes in the shift to electric vehicles, had been scrambling to secure new capital from new or existing investors and figure out a way to deal with a debt that’s ballooned to nearly US$300-million.
Talks on various options had been ongoing with the participation of the Quebec government but did not yield a deal ahead of a Dec.16 deadline on certain credit agreements with three lenders led by National Bank of Canada. Lion had also received some relief on minimum liquidity covenants, among other things, on a loan from Finalta Capital Inc. and pension fund giant Caisse de dépôt et placement du Québec.
Lion had warned that in the event it can’t raise additional funds or negotiate further concessions with its lenders that it won’t be in compliance with the terms of its credit and loan agreements. That in turn could force the company to repay immediately the amounts owed.
The company said Tuesday it is in default and expects to enter bankruptcy protection under the Companies’ Creditors Arrangement Act. It said it is in talks with its senior lenders to obtain additional funds under a new debtor-in-possession credit facility.
- Nicolas Van Praet
U.S. steelmaker Nucor (NUE-N) slid after it forecast fourth-quarter profit below Wall Street estimates on Monday, citing a slump in earnings in their steel mills segment caused by decreased volumes and lower average selling prices.
The company expects fourth-quarter earnings to be in a range of 55 US cents to 65 US cents per diluted share, lower than analysts’ estimates of 90 US cents per share, according to data compiled by LSEG.
However, it expects earnings in its raw materials segment to increase year-over-year in the fourth quarter.
Peer Steel Dynamics (STLD-Q) also forecast its fourth-quarter earnings below Wall Street estimates on Monday as the Indiana-based company sees lower realized steel prices and fall in shipments.
With files from staff and wires