TOP NEWS • Royal Bank of Canada beats second-quarter profit estimates Royal Bank of Canada beat analysts' estimates for second-quarter profit, as the bank released provisions due to lower risks tied to the pandemic and had strong loan growth.
• Chipmaker Broadcom to buy VMware in $61 billion deal Broadcom said it will buy cloud service provider VMware in a $61 billion cash-and-stock deal to further diversify the chipmaker's business into enterprise software.
• TD Bank quarterly profit beats estimates Toronto-Dominion beat analysts' estimates for quarterly profit, as strength in its Canadian retail banking units offset higher expenses and loan-loss provisions.
• Canada's CIBC misses quarterly profit estimates Canadian Imperial Bank of Commerce missed analysts' estimates for quarterly profit, on higher provisions for credit losses and expenses and lower investment banking revenue.
• Canada's Telus abruptly walks away from $830 mln offer for Australia's Appen Canadian data analytics software maker Telus International made and then abruptly withdrew a $830 million buyout approach for Australian rival Appen Ltd, Appen said.
BEFORE THE BELL Futures for Canada's main stock index were subdued, as gains in crude prices were countered by weakness in metals and concerns over slowing global economic growth. Oil prices rose, extending a cautious rally on signs of tight supply while the European Union (EU) wrangled with Hungary over plans to ban imports from Russia. European shares were up aided by energy shares. Japan's Nikkei ended lower, weighed by losses in chip-related stocks. The U.S. dollar edged lower. Gold prices fell, following the Fed’s tight monetary policy. Retail sales data is on the economic radar.
STOCKS TO WATCH
Results • Canadian Imperial Bank of Commerce: The bank missed analysts' estimates for quarterly profit, on higher provisions for credit losses and expenses and lower investment banking revenue. Net income excluding one-off items was C$1.65 billion, or C$$1.77, in the three months ended April 30, compared with C$1.67 billion, or C$1.79 a year earlier. Analysts had expected C$1.78 a share. Canada's fifth-largest lender reported overall net profit of C$1.52 billion, or C$1.62 a share, down from C$1.65 billion or C$1.78 a year ago.
• Royal Bank of Canada: The bank beat analysts' estimates for second-quarter profit, as the bank released provisions due to lower risks tied to the pandemic and had strong loan growth. Net income excluding one-off items was C$2.99 in the three months ended April 30, compared with C$2.79 a year earlier. Analysts had expected C$2.70 a share. The lender reported overall net profit of C$4.3 billion, or C$2.96 a share, up 6% from C$4 billion, or C$2.76, a year ago.
• Toronto-Dominion Bank: The bank beat analysts' estimates for quarterly profit, as strength in its Canadian retail banking units offset higher expenses and loan-loss provisions. Net income excluding one-off items was C$3.71 billion, or C$$2.02, in the three months ended April 30, compared with C$3.8 billion, or C$2.04, a year earlier. Analysts had expected C$1.93 a share. The bank reported overall net profit of C$3.81 billion, or C$2.07 a share, up from C$3.7 billion or C$1.99, a year ago.
In Other News • TELUS International (Cda) Inc: The Canadian data analytics software maker Telus made and then abruptly withdrew a $830 million buyout approach for Australian rival Appen Ltd, Appen said. "Telus informed us that they were revoking their Indicative Proposal. No reasons were given," the Australian software seller said. On Thursday, trading in Appen's shares was halted after they surged more than 29% to A$8.27, below the indicative offer price of A$9.50 a share, as investors positioned themselves for an eventual buyout — including from another company — while allowing for the possibility the talks could fall through. A deal would have helped build the Canadian firm's offering at a time when corporate clients around the world are moving to automate many services for a customer base that has shifted online due to the COVID-19 pandemic.
FOCUS Deere tapping into Apple-like tech model to drive revenue Deere has sold its tractors and other equipment to farmers for decades, but the world's largest agriculture machinery manufacturer is tearing a page from the technology world's playbook - combining cutting-edge hardware with software and subscription models to drive revenue growth.
ANALYSTS' RECOMMENDATION • Bank of Montreal: Credit Suisse cuts target price to C$157 from C$159, following unsuccessful acquisition of Bank of the West, and changes to the company’s strategy and the potential loss of key executives.
• Bank of Nova Scotia: National Bank of Canada raises target price to C$91 from C$90, as the company posted solid Q2 results backed by good loan growth and better-than-expected NIM expansion.
• Richelieu Hardware Ltd: CIBC raises to outperformer from neutral, citing strong balance sheet and anticipating accelerated market share gains and increased M&A opportunities.
ECONOMIC EVENTS (All timings in U.S. Eastern Time) 0830 (approx.) Retail sales mm for March 1.4%; Prior 0.1% 0830 (approx.) Retail sales ex-auto mm for March 2.0%; Prior 2.1% 0830 (approx.) Average weekly earnings yy for March: Prior 2.37%
COMPANIES REPORTING RESULTS May 26: Canadian Imperial Bank of Commerce: Expected Q2 earnings of C$1.78 per share Royal Bank of Canada: Expected Q2 earnings of C$2.67 per share Toronto-Dominion Bank: Expected Q2 earnings of C$1.93 per share
May 27: Canadian Western Bank: Expected Q2 earnings of 90 Canadian cents per share Canopy Growth Corp: Expected Q4 loss of 31 Canadian cents per share National Bank of Canada: Expected Q2 earnings of C$2.25 per share
CORPORATE EVENTS (All timings in U.S. Eastern Time) 0830 Royal Bank of Canada: Q2 earnings conference call 1000 Linamar Corp: Annual Shareholders Meeting 1300 Emera Inc: Annual Shareholders Meeting 1300 First Majestic Silver Corp: Annual Shareholders Meeting 1330 Toronto-Dominion Bank: Q2 earnings conference call 1400 Storagevault Canada Inc: Annual Shareholders Meeting 1400 Sunopta Inc: Annual Shareholders Meeting 1600 Alamos Gold Inc: Annual Shareholders Meeting
EX-DIVIDENDS Barrick Gold Corp: Amount $0.10 Enerplus Corp: Amount $0.04 iA Financial Corporation Inc: Amount C$0.62 Linamar Corp: Amount C$0.20 Quebecor Inc: Amount C$0.30 Ritchie Bros Auctioneers Inc: Amount $0.25 Russel Metals Inc: Amount C$0.38
(All analysts' estimates are according to I/B/E/S Refinitiv data.)
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