Market movers: Stocks that saw action on Friday - and why

A roundup of some of the North American equities making moves in both directions today

On the rise

Amazon.com Inc. (AMZN-Q) surged 7.3 per cent on Friday after it trumped Wall Street estimates for holiday-quarter results, putting the online retailer back in the US$1-trillion market capitalization club.

After the bell on Thursday, Amazon announced the expansion of its one-day shipping program came under budget and membership in its Prime loyalty club notched a 50-per-cent rise in two years.

It also forecast operating income of up to US$4.2-billion in the current quarter.

That may assuage investor concerns that Amazon was continuing to invest heavily in its fast delivery effort that could have erased its windfalls in e-commerce, advertising and its cloud computing business, Amazon Web Services (AWS).

Cott Corp. (BCB-T) increased 4.4 per cent on the heels of announcing before the bell it would sell its S&D Coffee and Tea business to privately owned Westrock Coffee Co for US$405-million in cash, as it looks to focus on its more profitable water business.

The company’s coffee, tea and extract unit posted revenue of US$587.6-million in fiscal 2018, accounting for nearly a quarter of its overall sales.

Earlier this month, Cott said it would buy U.S.-based Primo Water Corp. for US$549.4-million, bolstering its bottled water business in the North American market.

Medmen Enterprises Inc. (MMEN-CN) soared over 7.4 per cent after announcing before the bell that chief executive officer Adam Bierman has decided to step down effective Feb. 1.

Mr. Bierman, a co-founder of the company, has agreed to surrender all of his Class A super voting shares back to the Los Angeles-based company.

On the decline

Open Text Corp. (OTEX-T) slid 2.6 per cent higher after revealing it will spend as much as US$34-million on restructuring as it integrates recently acquired U.S. security-software firm Carbonite Inc., but the Waterloo, Ont.-based company will not reveal how many employees will be affected.

Open Text revealed the restructuring Thursday when it reported results from its fiscal 2020 second quarter ended Dec. 31. In an interview, chief executive Mark Barrenechea said that some employees would be affected, but that there would be a “net increase” of jobs to Canada as it moved certain operations into the country, including Carbonite’s outsourcing activities.

- Josh O’Kane

Imperial Oil Ltd. (IMO-T) declined 2.4 per cent after it edged past quarterly profit estimates on Friday, benefiting from a recovery in Canadian crude prices following Alberta’s mandated production cuts.

The company, which recently appointed Exxon veteran Brad Corson as CEO, said the price differential between U.S. and Canadian oil narrowed significantly during the fourth quarter to average about $16 per barrel compared with around $40 per barrel, last year.

Imperial reported a profit of $96-million in its upstream unit compared with a loss a year earlier, as price realizations rose and costs fell.

The company, majority-owned by Exxon Mobil Corp, said net income fell to $271-million, or 36 cents per share, in the fourth quarter ended Dec. 31, from $853-million, or $1.08, a year earlier.

Analysts had expected the company to report a profit of 35 cents per share.

Raymond James analyst Chris Cox said: “While headline results are positive vis-a-vis expectations, most of the beat on cash flow came on the back of a surprise cash tax recovery, with operating earnings in-line with Raymond James and Street expectations. Strong operational performance from Kearl is encouraging,especially with the supplemental crushing project now in-service.”

Exxon Mobil Corp. (XOM-N) slid 4.2 per cent after reporting a 5.2-per-cent drop in fourth-quarter profit on Friday, as assets sales propped up flat year-over-year oil and gas output and weakness in its refining and chemicals businesses.

Oil companies last quarter suffered from weaker prices for their products, and in Exxon’s case it has been spending heavily to boost its oil output to reverse production declines.

Its production in the Permian Basin, the largest U.S. shale field, was up 54 per cent from a year ago. But its exploration and production business, its largest, benefited the most from the sale of production assets in Norway for US$4.5-billion to Vår Energi AS.

Net income attributable to Exxon fell to US$5.69-billion, or US$1.33 per share, in the three months ended Dec. 31, from US$6-billion, or US$1.41 per share, a year earlier.

Excluding one-time items, per share earnings were 41 US cents, below Wall Streets consensus expectation of 43 US cents, according to Refinitiv. Analysts earlier this month had slashed estimates from 71 US cents after the company warned of weakness in chemicals and refining.

Chevron Corp. (CVX-N) on Friday dipped 3.8 per cent after it posted a fourth-quarter loss as the U.S. oil major booked an impairment charge of US$10.4-billion related largely to a deepwater Gulf of Mexico project, shale gas assets in Appalachia and the Kitmat LNG project in Canada.

The company had in December warned of up to US$11-billion in asset writedowns and said it was considering the sale of its stake in the Appalachian shale and in the proposed Kitmat project.

Net loss attributable to Chevron was US$6.61-billion, or US$3.51 per share, in the three months ended Dec. 31, compared with a profit of US$3.73-billion, or US$1.95 per share, a year earlier.

Caterpillar Inc. (CAT-N) declined 3 per cent on Friday after it forecast full-year earnings below analysts’ expectations as it struggles with sluggish global industrial activity.

The world’s biggest construction and mining equipment maker said it expects 2020 profit of US$8.50 per share to US$10 per share, compared with the average analyst estimate of US$10.63 per share.

“We expect continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories,” Chief Executive Officer Jim Umpleby said.

The Deerfield, Illinois-based company, considered a bellwether for economic activity, has been hit hard as its customers held off on big purchases due to the ongoing uncertainty, sparked by a prolonged U.S.-China trade war.

adjusted basis, while analysts on average expected Caterpillar to earn US $2.37 per share, according to IBES data from Refinitiv.

U.S. refiner Phillips 66 (PSX-N) slid 5.2 per cent after it missed analysts’ estimates for quarterly profit on Friday, hit by lower margins and higher turnaround activity at its refineries.

Turnarounds, which are planned capital projects, are a core part of the refining business and help prevent unexpected shutdowns and accidents.

The company said adjusted earnings at its refining segment plunged nearly 83 per cent to US$345-million in the quarter, as the refiner’s crack spread, or the difference between the price of crude oil and finished products, fell in the quarter.

Refiners in the U.S. have been facing challenges to obtain low-cost heavy crude, as prices have been hit by production cuts from Alberta, the Organization of Petroleum Exporting Countries as well as U.S. sanctions on Venezuela and Iran.

Adjusted earnings fell to US$689-million, or US$1.54 per share, in the fourth quarter ended Dec. 31, from US$2.26 billion, or US$4.87 per share, a year earlier.

Analysts on average had expected profit of US$1.56 per share, according to IBES data from Refinitiv.

Honeywell International Inc. (HON-N) was down 2.9 per cent after it forecast its 2020 sales below market expectations, saying Boeing Co.’s 737 MAX production halt will hurt its full-year growth rate.

The U.S. aero parts maker said its expects “significant production delays from the 737 MAX production halt” and it was trying to mitigate the impact, but did not provide details on its plans.

Honeywell makes 737 MAX products including auxiliary power units, aircraft lighting, weather radars and cockpit advisory systems that increase flight crew awareness of surroundings during taxi, takeoff and landing.

The company forecast 2020 sales in the range of US$36.7-billion and US$37.8-billion, below average analysts’ estimate of US$38.11-billion, according to IBES data from Refinitiv.

The company said it expects 2020 earnings per share between US$8.6 and US$9. The midpoint was slightly above the Wall Street estimate of US$8.79.

Electronic Arts Inc. (EA-Q) dropped 3.4 per cent after it forecast fourth-quarter revenue below analysts’ estimates after the bell on Thursday, weighed down by the delayed launch of its basketball title NBA Live, while its Apex Legends battles Fortnite and PUBG to attract young gamers.

The Redwood, California-based videogame publisher behind franchises like FIFA and Battlefield said it expects current-quarter adjusted revenue to be about US$1.15-billion, below analysts’ expectations of US$1.20-billion, according to IBES data from Refinitiv.

Visa Inc. (V-N) sat 4.4 per cent lower after it missed analysts’ estimates for revenue and posted a 14-per-cent rise in operating expenses for the first quarter on Thursday.

The world’s largest payments network has been spending more on rewards and incentives such as airport lounge access, roadside assistance programs and travel insurance, which pushed up operating expenses to US$2.04-billion in the three months ended Dec. 31.

The company’s net revenue rose 10 per cent to US$6.05-billion in the first quarter, but missed analysts’ estimates of US$6.08-billion, according to IBES estimates from Refinitiv.

World Wrestling Entertainment Inc. (WWE-N) plummeted almost 22 per cent after it announced after the bell Thursday the immediate departure of co-presidents George Barrios and Michelle Wilson.

The announcement prompted Evercore ISI analyst John Belton to cut his rating for its stock to "in-line" from "outperform."

“WWE unexpectedly announced management changes [Thursday] after the close, following months of uncertainty surrounding several key strategic and financial initiatives," said Mr. Belton. "Specifically, Co-Presidents George Barrios and Michelle Wilson have left the company and the Board of Directors, and CRO / CFO searches have commenced. The press release announcing the changes was vague, with Chairman / CEO Vince McMahon citing ‘different views on how to best achieve strategic priorities moving forward’ as reason for the changes.”

Nike Inc. (NKE-N) was down 2 per cent after World Athletics announced significant changes to its rules on Friday that will outlaw some variants of its Vaporfly running shoes and introduce strict limits to the technology developed for any future shoes used in elite competition.

The sport’s governing body (WA) said that with immediate effect, road shoes must have soles no thicker than 40mm and not contain more than one rigid, embedded plate.

The Vaporfly shoes used by Eliud Kipchoge to run the first sub-2 hour marathon and by fellow Kenyan Brigid Kosgei to smash the women’s marathon world record both contained triple carbon plates inside thick, ultra-compressed foam, said by Nike to help improve running economy by up to four per cent.

See also: Why a ban on Vaporfly shoe could boost Nike’s bottom line

With files from staff and wires

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