A survey of North American equities heading in both directions
On the rise
Montreal-based CGI Inc. (GIB.A-T) closed up 0.5 per cent after it reported a first-quarter profit of $438.6-million, up from $389.8-million a year ago, and announced a deal to buy BJSS, a technology and engineering consultancy based in the United Kingdom.
The business and technology consulting firm says BJSS has more than 2,400 consultants and professionals. Financial terms of the deal were not immediately available.
CGI appoints Julie Godin as executive chairperson, strikes deal to buy Britain’s BJSS
The deal came as CGI reported its profit amounted to $1.92 per diluted share for the quarter ended Dec. 31, up from $1.67 per diluted share a year earlier.
Revenue for the quarter totalled $3.8-billion, up from $3.6-billion a year earlier.
On an adjusted basis, CGI says it earned $1.97 per diluted share in its latest quarter, up from an adjusted profit of $1.83 per diluted share a year earlier and matching the Street’s expectation.
Bookings for the quarter totalled $4.2-billion, while the company’s backlog stood at $29.8-billion at the end of the quarter.
In a research note, Desjardins Securities analyst Jerome Dubreuil said: “CGI’s 1Q FY25 results were roughly in line with the Street’s expectations, with a slight top-line beat, but EBIT margins came in slightly short of expectations, as we had warned in our preview. However, we expect the stock will react positively as investors will be focused on the M&A acceleration—CGI announced a material acquisition this morning. It also announced that Julie Godin is transitioning from co-chair of the board to executive chair, while Serge Godin is transitioning from executive chair to co-chair. We understand that Mr Godin remains CGI’s controlling shareholder.”
Starbucks Corp. (SBUX-Q) reported a smaller-than-expected fall in first-quarter comparable sales on Tuesday, in early signs of the struggling coffee chain benefiting from CEO Brian Niccol’s efforts to revive demand.
The company’s shares rose 8.1 per cent in Wednesday trading. They have gained nearly 30 per cent since his appointment in August last year.
“It’s a critical year in front of us, and we have a lot of work to do to get back to Starbucks,” Niccol said.
Mr. Niccol is credited with reviving the burrito chain Chipotle Mexican Grill (CMG-N) in his last CEO role. He aims to return Starbucks to its coffee house roots in the U.S. by rolling out a simpler menu, ceramic cups, refills and condiment bars, and cutting wait times at the cafes to under four minutes.
He said Starbucks’ current system of mobile ordering, which handles orders on a first-in, first-out basis, is a “chokepoint” that can overwhelm baristas and the primary obstacle to achieving shorter wait times. A more efficient mobile order system “frees us up to another degree that we haven’t totally comprehended,” he said.
Doing so could help realize the company’s potential to eventually double its store count in the U.S., Mr. Niccol said.
Mr. Niccol has also cut back on the company’s deals and discounts and instead sought to broaden its marketing beyond loyalty program members.
Starbucks’ global same-store sales fell 4 per cent in the three months ended Dec. 29, Mr. Niccol’s first full quarter at the helm, compared with analysts’ expectations of a 4.6-per-cent fall, according to data compiled by LSEG.
“Investors are looking for early indicators that the transformation is in place. The results were broadly in line with expectations,” said Danilo Gargiulo, senior analyst at Bernstein.
Excluding items, Starbucks reported earnings per share of 69 US cents, beating estimates of 67 US cents.
Chinese tech company Alibaba (BABA-N) jumped 0.7 per cent on Wednesday as it released a new version of its Qwen 2.5 artificial intelligence model that it claimed surpassed the highly-acclaimed DeepSeek-V3.
The unusual timing of the Qwen 2.5-Max’s release, on the first day of the Lunar New Year when most Chinese people are off work and with their families, points to the pressure Chinese AI startup DeepSeek’s meteoric rise in the past three weeks has placed on not just overseas rivals, but also its domestic competition.
“Qwen 2.5-Max outperforms ... almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405B,” Alibaba’s cloud unit said in an announcement posted on its official WeChat account, referring to OpenAI and Meta’s most advanced open-source AI models.
The Jan. 10 release of DeepSeek’s AI assistant, powered by the DeepSeek-V3 model, as well as the Jan. 20 release of its R1 model, has shocked Silicon Valley and caused tech shares to plunge, with the Chinese startup’s purportedly low development and usage costs prompting investors to question huge spending plans by leading AI firms in the United States.
But DeepSeek’s success has also led to a scramble among its domestic competitors to upgrade their own AI models.
Two days after the release of DeepSeek-R1, TikTok owner ByteDance released an update to its flagship AI model, which it claimed outperformed Microsoft-backed OpenAI’s o1 in AIME, a benchmark test that measures how well AI models understand and respond to complex instructions.
Top computer chip equipment maker ASML (ASML-Q) reported fourth-quarter bookings on Wednesday that far exceeded expectations, as a boom in AI drove demand for its most advanced equipment.
The surge in orders may reassure investors in ASML and other chip stocks that AI chip prospects remain healthy, despite a selloff this week sparked by the release of DeepSeek’s model, which uses less computing power than its rivals.
ASML’S U.S.-listed shares were up over 4 per cent on the news.
Bookings reached 7.09 billion euros (US$7.39-billion), compared with analyst forecasts of 3.99 billion euros, according to Visible Alpha.
“I think if anything, AI has strengthened the opportunity for this business,” CEO Christophe Fouquet said at a press conference following earnings.
The launch of DeepSeek has raised questions about whether tech giants, including Google, Microsoft, Meta and Amazon, will continue planned investments in AI chips. ASML’s biggest customer, TSMC, manufactures most chips designed by Nvidia and the software firms.
However Mr. Fouquet argued that reducing the cost of AI models should lead to a surge in demand as prices fall.
ASML reported fourth quarter net income of 2.7 billion euros on sales of 9.3 billion euros.
The numbers beat expectations “from bookings to bottom line,” said Michael Roeg, an analyst for Degroof Petercam. He cautioned that ASML is “too far from the fire” to really be able to answer whether DeepSeek’s advent marks a major change in market trends.
“That is for the large data centre operators to answer in their conference calls, and for Nvidia to answer in their conference call,” he said.
Truth Social parent Trump Media and Technology Group (DJT-Q) said on Wednesday its board of directors has approved the launch of a financial services and FinTech brand Truth.Fi, sending shares of the firm up 6.8 per cent.
The company board has also authorized an investment of up to US$250-million through Charles Schwab as it looks to diversify its cash holdings, which exceeded US$700-million at the close of the previous year.
The Sarasota, Florida-based company said it plans to allocate these funds into various investment options, including exchange-traded funds, separately managed accounts, Bitcoin, and other similar cryptocurrencies.
Spirit Airlines (SAVEQ-OTC) jumped said on Wednesday it has rejected a bid from rival Frontier Group (ULCC-Q) as it was not favorable for the low-cost carrier and expects to exit bankruptcy in the first quarter.
Frontier offered Spirit shareholders US$400-million in debt and a 19-per-cent stake in Frontier earlier this month, Spirit said in a regulatory filing.
The proposal implied a total consideration of about US$2.16-billion, Frontier said in a letter to Spirit that was made public along with the filing.
Ultra-low-cost carriers, which excelled at keeping expenses low and offering no-frills travel, have struggled since the pandemic as travelers prefer to pay extra for a more comfortable journey.
“As a combined airline, we would be positioned to offer more options and deeper savings, as well as an enhanced travel experience with more reliable service,” Frontier CEO Barry Biffle said in a statement.
Analysts have said a successful merger with Frontier could establish a nationwide discount airline more capable of attracting price-sensitive passengers.
But Spirit rejected the proposal as it would not provide the anticipated shareholder value and raised concerns over the timing and successful completion of the deal.
In 2022, Spirit Airlines came close to a merger deal with Frontier but the talks were halted in favor of JetBlue, which won the bidding war for the airline.
Spirit and JetBlue had to scrap that deal last year, after a U.S. judge blocked the merger on anti-competition concerns
The Florida-based airline declared bankruptcy in November after grappling with prolonged periods of financial losses, unsuccessful merger efforts and a substantial levels of debt.
T-Mobile (TMUS-Q) said on Wednesday it expected its wireless subscriber growth this year to exceed Wall Street estimates by more than double, due to strong demand for its premium 5G plans, sending its shares 6.3 per cent higher.
The forecast followed a strong fourth quarter in which the U.S. telecom major posted industry-leading postpaid phone net additions of 903,000, which easily surpassed FactSet estimates of 858,500.
T-Mobile’s Go5G Next and Go5G Plus plans have resonated with customers as they bundle high-speed internet with popular services such as Netflix and Apple TV+. Its fourth quarter also benefited from Black Friday deals and the AI-powered iPhone series, which led more customers to upgrade their phones.
The company expects postpaid net customer additions to be between 5.5 million and 6 million in 2025, compared with an estimate of 2.7 million, according to FactSet.
CFO Peter Osvaldik told Reuters that the company’s premium plans and holiday promotions enticed customers from rival networks to switch over in the fourth quarter.
T-Mobile continues to see more than 60 per cent of new customers opting for its value-packed top-tier plans, Mr. Osvaldik said.
The wireless carrier has also tried to expand its customer base by improving coverage and targeting smaller markets and rural areas. It offers fixed wireless access as an alternative internet solution in regions where fiber optic infrastructure is either sparse or unavailable.
The results cap a strong quarter for U.S. wireless providers, with AT&T (T-N) and Verizon Communications (VZ-N) also topping subscriber addition estimates.
Daniel Loeb, who runs hedge fund Third Point, on Wednesday urged SoHo House (SHCO-N) directors to run a “fair” sales process and consider other potential bidders after the hospitality group received a take-private offer late last year.
The billionaire investor called the US$9 a share offer made last year a “sweetheart” deal and added that he thinks other parties with experience investing in the hospitality sector may be interested in the asset.
Third Point owns a nearly 10-per-cent stake in the operator of exclusive private clubs and Loeb, in a letter to the SoHo House board, said he approves of returning the company to private ownership. News of Loeb’s involvement pushed Soho House shares up trading after closing at US$7.37 a share on Tuesday. The company is valued at roughly US$1.4-billion.
SoHo House has been public since 2021 but struggled financially. To take it private, Loeb writes that SoHo House’s board engaged in a “sweetheart” deal with its chairman, Ron Burkle, who runs investment firm Yucaipa.
“Burkle’s obvious conflicts of interest and undue influence on the board via his super-voting share class make it imperative that the Board open the sale process to outside bidders,” the letter said.
Nasdaq (NDAQ-Q) rose 0.7 per cent after reporting a higher fourth-quarter profit on Wednesday, helped by strong demand for the exchange operator’s financial technology products.
The company has been expanding outside its market-sensitive core activities of trading and listing to products that help traders navigate compliance requirements and safeguard against financial crimes.
Revenue from Nasdaq’s financial technology business rose nearly 9.8 per cent in the fourth quarter.
Hopes of a soft landing for the U.S. economy, strong equity markets and expectations of a friendlier regulatory environment for deals and offerings under the Trump administration breathed new life into the U.S. IPO market during the reported quarter.
Nasdaq stock market’s total new listings rose to 162 in the fourth quarter from 100 a year earlier, resulting in a 1.6-per-cent increase in the company’s data and listing services revenue.
Software firm ServiceTitan (TTAN-Q) and China’s self-driving vehicle company WeRide (WRD-Q) were some of the big names that listed its shares on Nasdaq during the October-December quarter.
Net profit attributable to Nasdaq, on an adjusted basis, came in at US$438-million, or 76 US cents per share, in the fourth quarter ended Dec. 31, compared with US$395-million, or 72 US cents per share, a year earlier.
On the decline
Shares of Brampton, Ont.-based MDA Inc. (MDA-T) dropped 9.5 per cent in response to news Apple Inc. is now supporting SpaceX and T-Mobile’s direct-to-device satellite service.
“To recap, MDA has been working under a $300 million authorization-to-proceed from an undisclosed customer, on a LEO constellation that is expected to have a minimum contract value of $750 million,” said BMO analyst Thanos Moschopoulos. “The mystery customer is widely believed to be Apple/Globalstar, given 1) the announcement in November that Apple would be providing Globalstar US$1.5 billion of funding for the buildout of a constellation; and 2) MDA’s role in building the last batch of satellites that Globalstar had ordered on behalf of Apple.
“Given that Android handsets will be supporting Starlink, we’re not surprised to see Apple do the same. While Apple’s long-term intentions with respect to satellite services are unclear, the cumulative US$2 billion+ financing it has provided to Globalstar suggests it has an interest in controlling its own infrastructure, in order to provide its own slate of proprietary satellite services. In other words, while it’s possible that Apple may decide in the future to rely on Starlink for its own satellite services, we believe it’s incorrect to interpret the Apple/Starlink news as an indication that Apple has suddenly opted to back off on its own constellation plans.”
Also believing MDA has “good visibility for Apple/Globalstar revenue through perhaps FY2027, stemming from Apple’s recent commitment to Globalstar,” Mr. Moschopoulos called Wednesday’s selloff “unwarranted” and added: “In our view, the recency of Apple’s $1.5 billion investment in Globalstar, announced in November, suggests that Apple remains interested in investing in its own satellite infrastructure. We see no impact to MDA from this development with respect to FY25/26 forecasts.”
Lundin Gold (LUG-T) declined 0.8 per cent after he company’s chief executive Ron Hochstein told journalists on Wednesday it expects to produce between 475,000 ounces and 525,000 ounces of gold per year from 2025 to 2027 at the Fruta del Norte mina in Ecuador.
In 2024, the Canadian mining company saw production of 502,029 ounces at the mine, Hochstein said, adding that expansion works at the mine’s processing plant would finish in the first quarter of this year.
Novo Nordisk (NVO-N) gave back early gains and lost 1.4 per cent in the wake of the U.S. FDA approving its Ozempic drug for reducing the risk of kidney failure and disease progression, as well as death due to heart problems in diabetes patients with chronic kidney disease (CKD)..
Novo’s blockbuster diabetes drug Ozempic belongs to a class of drugs known as GLP-1 receptor agonists and has the same active ingredient as its popular obesity treatment Wegovy.
The U.S. Food and Drug Administration’s approval makes the drug, chemically known as semaglutide, to become the first GLP-1 treatment option for people with type 2 diabetes and CKD.
“Such an approval adds to the mounting body of evidence showing GLP-1 agents’ utility in indications beyond type 2 diabetes and obesity,” BMO Capital analyst Evan Seigerman said.
The approval was based on data from a late-stage study, which showed that Ozempic helped cut the risk of death from chronic kidney disease and major cardiac events by 24 per cent, the company said.
Ozempic is also approved to reduce the risk of major cardiovascular events such as heart attack, stroke or death in adults with diabetes and known heart disease.
Last month, the European Medicines Agency allowed Novo to add risk reduction for events related to kidney disease to the label of Ozempic.
Teva Pharmaceutical Industries (TEVA-N) slid 13.9 per cent even though it reported a slightly larger than expected rise in fourth-quarter profit, helped by double-digit sales gains in a trio of its branded drugs to treat migraines, Huntington’s disease and schizophrenia.
The world’s largest generic drugmaker said on Wednesday it earned 71 US cents per diluted share excluding one-off items in the October-December quarter, down from US$1.00 per share a year earlier. Revenue fell 5 per cent to US$4.2-billion.
Analysts had forecast earnings of 70 US cents per share ex-items for the Israel-based company on revenue of US$4.13-billion, LSEG I/B/E/S data showed.
Teva noted that in the fourth-quarter of 2023 its revenue was boosted by a US$500-million upfront payment from Sanofi related to their collaboration on developing a treatment for inflammatory bowel disease.
For all of 2024, Teva recorded diluted EPS of US$2.49 ex-items - above estimates of US$2.47 - compared with US$2.56 in 2023. Full-year revenue rose 6 per cent in local currency terms, and 4 per cent in dollar terms to US$16.5-billion, led by higher sales of generic medicines, migraine drug Ajovy, Huntington’s treatment Austedo and its schizophrenia drug Uzedy.
Teva forecast 2025 revenue of US$16.8-billion to $17.4 billion and diluted EPS ex-one offs of US$2.35-$2.65. Analysts expect revenue of US$17.1-billion and EPS of US$2.76.
Apparel and footwear maker VF Corp. (VFC-N) beat third-quarter revenue and profit estimates, helped by efforts to revive demand and refresh the product lineup of its Vans, North Face and Timberland brands.
Shares of the company were down 3.9 per cent in Wednesday trading.
Favorable weather in the U.S. has driven demand for outdoor and active wear, especially during the holiday season.
More full-price sales and cost-cutting under its turnaround plan also helped the Timberland footwear maker grow its third-quarter adjusted operating margins by 360 basis points to 11.4 per cent.
VF Corp has now beaten revenue and profit estimates for three successive quarters, recovering from demand headwinds and losses that had affected the company up to early 2024.
The company’s turnaround plan involves focusing on its Vans brand, cutting US$300-million in costs by the end of fiscal 2025, and selling non-core businesses such as its streetwear brand Supreme.
For the quarter ended Dec. 28, the company’s revenue rose 2 per cent to US$2.83-billion from a year ago, beating analysts’ estimates of US$2.75-billion, according to data compiled by LSEG.
On an adjusted basis, VF Corp posted profit of 62 US cents per share, compared with estimates of 34 US cents.
With files from staff and wires