Unusually Heavy Friday

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Today is another heavy news day, which is unusual for a Friday. We start with the largest company's lamentable report, follow with another confusing result, then a hopeful drug company report, and finish with an update on a Canada play from my portfolio (but not yet in the model portfolio). Plus other news is included, of course.

Royal Dutch Shell (RDS-B), whose B shares we own, managed to leave even analysts confused due to new CFO Jessica Unl. Her main mistake was to have delivered a Q1 result with few numbers on EPS and sales, which is what we want to see. Instead the focus was on Shell's debt cut -- clearly a good thing, but not a key to the stock price post-earnings.

When you cut through the fluff, the figure of $3.23 billion could be discerned, which perhaps was up from the consensus forecast of $3.1 billion, although this is a point of contention. Zacks said it beat and Reuters said it missed. Unl talked about the impact of the Texas blizzard; about the positive impact on earnings of chemical and refining operations, and the negative impact of LNG on earnings.

Then, as is customary in oil company reports, a number was given: the cost of supplies basis at $4.35 billion in this year's Q1 versus $2.76 billion in last year's. It was the first plus number in the last five quarters (because of COVID-19). Buyback queries were not dealt with in the conference call, but Shell insisted it would keep asset prices at last year's level despite a higher oil price. And yes, debt was cut to $71 billion from $75 billion in Q4 2020.

Then an innovation which is meaningless was introduced: a shareholder vote on the Shell transition strategy as it moves away from oil production. This resulted in a 6% drop in the price of RDS-B so far today. It announced a dividend of 17.35¢/share, but not the level for the ADR. It was rated a hold by CFRA, which is always a safe call. It may or may not do buybacks next year of $7 billion if it earns enough to cut its debt to $62.5 billion in Q3 this year, according to Credit Suisse.

Lazard (LAZ) reported on its Q1 from Bermuda where its ADR is registered. It is French by origin yet manages money globally. Lazard stock crashed 8.15% in European trading despite what probably is an earnings beat, undermined by CEO Ken Jacobs telling the world he wants to hire more analysts with a background in hedge funds and long only.

This is not the sort of thing that should be discussed in a quarterly report. Further messing with minds was the data report, which stated operating revenues had gone up to $648 million thanks to record deal-making, yet corporate business was below expectations. It was up 115%. And assets under management hit a new record of $265 billion, but, of course, this was for the Bermuda entity, not the French one.

This produced adjusted net earnings of $101 million or 87¢/ diluted share, but in US GAAP produced net earnings of $87 million or 75¢/ diluted share. Even apart from Mr Jacobs' plan to go a-hiring, there seems to be too much spending on compensation and benefits at Lazard. The stock recuperated some from its drop in European trading, opening in the US at a loss of only 6.725%. Now it is down only 5.96%.

Novocure (NVCR) of St Helier, Jersey in the Channel Islands also reported. Note that places like Bermuda and Jersey will probably escape the basic minimum tax the OECD countries are plotting. Novocure is escaping much higher taxes than most. It now has two products using its tumor-treating (electric) fields on the market, with one in phase III for non-small cell lung cancer and one in phase 2 fully enrolled for liver cancer.

Its Q1 net revenues were only $135 million versus $248 million a year earlier, while spending for R&D was down only 5 million to $46 million. Revenues were up 32% sequentially, however. This produced a net loss for Q1 of $4 million versus a gain of $20 million in the prior 2020 quarter. Adjusted EBITDA hit $21 million down from a total of $190 million last year.

Costs of revenues rose 8% to $26.400 and operating income fell by $88,000. It had $2.646 million in financial expenses. Novocure, with its TTF, has a wholly new method of using alternating electric currents to zap cancer cell division and spread. If it works, it will change how cancer is treated.

Weyerhaeuser (WY) dropped 6.41% today and remains down 4.12%, after an EPS miss at 91¢, a penny below the forecast, but up from 48¢ in Q4 and 18¢ a year earlier. Sales came in at $2.51 billion, below the consensus forecast of $2.57 billion or $2.52 billion, depending on which report you read. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) beat at $1.10 billion versus estimates of $1.09 billion.

Lumber sales were up 42% from the prior Q1 and the oriented strand board was up 22%. It forecasts the current quarter will produce adjusted EBITDA for the current quarter at ~$225 million, a big jump. Confusingly, it will sell 145,000 acres of timberland in the State of Washington (Northern Cascades) for $266 million, which would more than cover the increased EBITDA forecast.

An article on Chinese electric vehicles signed by Jonathan Weber opted for Nio (NIO) over competitors like XPeng (XPEV) for its battery swap system and predicted it will beat its 80,000 car sales target for this year. He expects revenues will hit $54 billion, up 59% in 2021, and reach $12.5 billion in 2022. We sold 2/3 of our Nio stock earlier this year. I am pondering buying some of this back. However it is up 2.9% today, so I have to wait. 

Hoegh (HMLP) shares are among the few winners in the oil patch. It is up 0.4% on no news. Schlumberger Ltd (SLB) fell 2.52%, losing yesterday's gain. Alcon will acquire all rights to glaucoma drug Simbrinza from Novartis (NVS) for $355 million when the deal closes this quarter. It will boost the focus of Alcon on closure, which is expected in Q2. Novartis is down 0.845.

Roche (RHHBY) rose on news the FDA is keeping its bladder cancer drug on the market. Astra Zeneca (AZN) rose nicely in London trading today.

Fear of tax hikes on bonuses have hit the pharma industry. Glaxo (GSK) is up 0.5% on no news. Takeda (TKPHF) is up 0.54% on no news. Bristol-Myers (BMY) is down 1.15%. Bioline RX (BLRX) is up 5.6% on no news. Enlivex (ENLV) shares are down 3%+ on no news. Aurina Pharma (AUPH) shares are up 10.43% on no news. Nokia (NOK) managed another jump of 2.6% in London today.

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