From Standard & Poor's European MarketScope
Vodafone was up £0.02 to £1.42 after Lehman Brothers recommended a switch into the company from BT. The broker said that BT shares look expensive compared to Vodafone and European telecoms. Separately, Dresdner Kleinwort Wasserstein said that it is time for the company's shares to rally.
Shell Transport was down £0.16 to £5.48 after Deutsche Bank downgraded the company to hold from buy. The broker also raised its oil price estimates and natural gas price estimates. Separately, JP Morgan raised its fair value target to €52 from €45 and maintained its underweight rating. Meanwhile, crude prices fell after Hurricane Dennis struck western Florida.
Liquor group Diageo was down £0.19 to £7.81 after Lehman Brothers downgraded the company to equalweight from overweight. In addition, the broker would now prefer beer to spirits given the relative valuations. Meanwhile, the bank ING lifted its target to £8.45 from £8.35 and kept its buy rating.
Insurance and financial-services group Prudential was up £0.09 to £5.23 and online bank Egg was up £0.07 to £1.12 after The Observer newspaper reported that Citigroup is pondering a potential £1 billion bid for Egg, of which Prudential owns 79%. The report said that Citigroup is looking for small bolt-on European acquisitions and Egg would fit the bill. Neither Citigroup nor the company commented.
Cadbury Schweppes was down £0.12 to £5.38 after Credit Suisse First Boston increased its target to £5.00 from £4.20 and reiterated an underperform.
Intercontinental Hotels was down £0.08 to £7.03 after the Financial Times reported that the company is set to expand its Holiday Inn chain by signing a franchise agreement with the owners of five former Hilton properties. The report said that a joint-venture company, formed between Starwood Capital and Chardon Hotels, known as Stardon, bought eleven of Hilton's British hotelsin March for £111 million. Five of these hotels will now come under the Holiday Inn brand following the deal with the company.
BP oil group was down £0.08 to £6.34 after crude oil prices fell below $59 a barrel after Hurricane Dennis struck western Florida, but did not hit oil rigs and platforms in the Gulf of Mexico.
Air France-KLM was up €0.17 to €12.97 after the newspaper NRC Handelsblad reported that the company is considering a plan to divert €662 million from the cabin crew pension surplus and count it as profit over the next five years.
Cosmetics group L'Oreal was up €0.90 to €60.35 ahead of the company's second-quarter sales report Tuesday. Analysts predict a rebound in like-for-like sales in the second quarter compared with the first, with forecasts suggesting numbers will be up between 4.5% and 5.3%. Brokers agree that European sales are likely to have remained modest, with the U.S. and the rest of the world performing more strongly. Meanwhile, Credit Suisse First Boston raised its target to €60 from €55 and reiterated its underperform rating, thanks to the U.S. dollar's rally in the second quarter.
Food group Danone was down €1.60 to €79.65 on profit-taking after last week's rally. Credit Suisse First Boston lifted its target to €75 from €70 and kept its neutral rating. The broker said that the second quarter saw a useful rally in the U.S. dollar and noted that the company's shares rallied last week on market talk of a potential takeover bid. Separately, Lehman Brothers removed the stock from its consumer portfolio following the company's outperformance on the back of a possible bid from PepsiCo.
STMicroelectronics was up €0.34 to €14.02 after Lehman Brothers said it maintains the view that the sector trades range-bound, with euro semiconductors likely to receive additional foreign exchange benefit. The broker prefers STMicrolectronics for restructuring, noting, too, that the company benefits from U.S. dollar strength. The broker rates the company overweight with a €14.8 target price, based on mid-cycle valuation.
Retail group Pinault-Printemps-Redoute was up €0.95 to €84.70 after the brokerage Cheuvreux increased its target to €93 from €90 and reiterated its outperform rating. The broker increased fiscal year 2006 estimates for the company's Gucci unit by 8% to account for new currency parity expectations.
Chipmaker Infineon was up €0.23 to €8.06 after LG.Philips LCD, in which Infineon holds around a 44.6% stake, posted second quarter net income of 41 billion South Korean won compared to 701 billion won in the previous year and a consensus estimate of 1.5 billion won. Separately, spot prices of the 256-megabit double-data-rate DRAM chip jumped 4.4% on Friday, due to insufficient supply, Bloomberg wrote, citing Dramexchange.com. Separately, Lehman Brothers noted that several companies benefit from U.S. dollar strength, including the company.
Drug and chemical company Bayer was up €0.57 to €27.70 after the company and Onyx Pharma applied to the Food and Drug Administration for approval of its Sorafenib drug to treat kidney cancer. The company aims to introduce the treatment in the first half of 2006.
Volkswagen was up €1.23 to €40.01 as Der Spiegel reported that the carmaker aims to introduce up to ten new car models in the coming years for its VW brand to improve its image and boost sales. Analysts say Peter Hartz' resignation on Friday will strengthen the reformer side and will further weaken unions and the works council, which from a shareholder perspective is good news. For the first time management also might consider plant closures to reduce costs, which analysts believe is necessary to lower the company's high fixed cost base.
TV broadcaster ProsiebenSat1 was up €0.68 to €15.00 after major stakeholder Haim Saban said that the company will report a 'much stronger' profit in the second half of 2005 than in the first quarter as the television advertising market recovers.
Insurance and asset management group Allianz was up €1.05 to €98.81 after the company said that it will keep its Dresdner Kleinwort Wasserstein investment banking unit, rejecting speculation that the division may be sold or merged with another lender, according to a press report.
Lufthansa was up €0.13 to €10.26 after the airline reported that June passenger traffic rose 5.2%, while the company filled 77.2% of its seats. The company handled 4.7 million passengers, up 4% from last month. The company also said that it will book €180 million in the third quarter from its sale of its 5.1% stake in Amadeus Global Travel on July 4.
Eyeglass maker Luxottica was up €0.75 to €18.50, as the U.S. dollar proxy has scope for upside, and the management offers an excellent track record when it comes to extracting value from acquisitions, according to one source.
Fiat was up €0.07 to €6.33 following the company's top-level meeting with fund managers in Milan on Friday. While sources disclose that no additional information came out of the meeting, attendees did underline CEO Sergio Marchionne's focused approach to achieving earnings before interest and taxes breakeven for the car division. Marchionne believes cost cutting and debt reduction is key, with particular attention on cutting advertising and research and development spending. Meanwhile, Telecom Italia is said to be considering buying Fiat's Atlanet telecom business, according to the newspaper Il Sole 24 Ore. Telecom Italia was up €0.04 to €2.56.
Dutch media group VNU was down €0.86 to €22.49 after the company confirmed that it will buy U.S. healthcare data provider IMS Health for €5.80 billion in cash and shares. The company also announced plans to buy back up to €500 million of its stock. The bank Fortis said that this deal seems pricey and value destructive at first sight and maintained its reduce recommendation. The bank ING said that this is a good strategic move from the company, and rated the stock hold with €24 target.
Royal Philips Electronics was up €0.43 to €22.03 after LG.Philips LCD, in which the company holds around a 44.6% stake, posted second quarter net income of 41 billion South Korean won compared to 701 billion won in the previous year and a consensus estimate of 1.5 billion won.
Royal Dutch oil group was down €1.35 to €54.00 after Deutsche Bank downgraded the company to hold from buy. The broker also raised its oil price estimates and natural gas price estimates. Separately, JP Morgan raised its fair value target to €52 from €45 and maintained its underweight rating. Meanwhile, crude prices fell after Hurricane Dennis struck western Florida.
Dutch bank ABN Amro was up €0.24 to €20.65 after its private equity unit bought holiday parks operator Roompot in a secondary buy-out from Dutch private equity firm Bencis Capital Partners. Roompot is expected to earn sales of some €125 million in 2005.
Chip equipment maker ASML was up €0.57 to €13.88 after the brokerage Cheuvreux upgraded the company to its selected list from outperform, warranted by a 25% share price upside. Separately, spot prices of the256-megabit double-data-rate DRAM chip jumped 4.4% on Friday, due to insufficient supply, Bloomberg wrote, citing Dramexchange.com. Standard and Poor's Ratings Services affirms its BBB rating and stable outlook on the merger.
Mittal Steel was up €0.43 to €20.93 after the company offered the Czech Government around €300 million for a 98.96% shareholding in state-owned Vitkovice Steel.
Statoil was down 2.50 Norwegian kroner to 144.50 kroner, after Deutsche Bank downgraded the oil group to hold from buy after a third upward revision to oil price estimates in 2005. Separately, the company is developing the Tyrihans oil and gas field in the Norwegian Sea and estimates the cost to amount to 14 billion Norwegian kroner. Production is meant to start in 2009, according to the company.
Mobile phone giant Nokia was up €0.30 to €14.44 after it strengthened its foothold on the Asian tetra terminal market by signing a contract that will deliver tetra terminals to the South Korean market. No financial details were disclosed.