TSX recap: Tech stocks, led by Shopify, drag on index
Tech stocks led the way lower for the S&P/TSX Composite Index on Tuesday.
The index closed 90.87 points lower, or 0.46 per cent, to 19,578.30. Shopify took the most points off the tape, ending with a 7.45 per cent loss at $47.30 per share.
On the positive side, shares of Recipe Unlimited Corp. soared 45.52 per cent to $19.66 on Tuesday after Prem Watsa’s Fairfax Financial Holdings Ltd. offered to buy the restaurant operator in a take-private deal for $20.73 per share.
The offer is a 53 per cent premium to Recipe’s Monday closing stock price, the company said in a press release.
The transaction would bring many well-known restaurant brands including Swiss Chalet, Harvey's, The Keg and Pickle Barrel under Fairfax’s umbrella.
“You got to love Prem Wasta. He sure doesn’t shy away from taking big swings. But sometimes, he hits a home run and sometimes he strikes out,” David Baskin, the president of Baskin Wealth Management, said in a TV interview on Tuesday.
“[It’s] a great premium for shareholders of Recipe. It’s a big price that he’s paying,” he added.
Meanwhile, Bausch Health Companies Inc. was among the worst-performing stocks on the TSX Tuesday after reporting weaker-than-expected second quarter results.
Bausch’s revenue fell six per cent and the company cut its full-year sales forecast. Shares ended 10.67 per cent lower to $6.70. It marks the second significant hit to the stock price since July when a U.S. judge ruled some patents for one of the company’s drugs were invalid.
“Bausch is in a tough situation. Drug development and pharma is a tough space and when you have patent cases go against you, and you have management changes, I think investors are losing confidence and it’s going to be tough to see how they get out of this mess,” Greg Taylor, the chief investment officer at Purpose Investments, said in an interview Tuesday morning.
Taylor said Bausch shareholders might want to re-evaluate why they’re holding the company.
“If you bought it for the drug that’s now under patent question, then it’s probably time to move on because this is going to be something that could drag on and not have an easy resolution any time soon,” Taylor said.
It was also a risk-off day in New York as investors awaited the latest inflation data on Wednesday. The S&P 500 fell 0.42 per cent, the Dow was down 0.18% and the Nasdaq slid 1.19 per cent.
Wall Street is expecting consumer prices jumped 8.7 per cent on an annualized basis last month.
West Texas Intermediate dipped US$0.26 to US$90.50 per barrel.
The Canadian dollar lost one-tenth of a cent to 77.60 cents U.S.