From Standard & Poor's European MarketScope
British American Tobacco was down £0.12 to £10.79, after Citigroup said that the Federal Supreme Court of Canada will today determine the constitutionality of a law - the British Columbia Tobacco Damages Act - under which the government is seeking potentially multibillion dollar damages. The bank argues that if the law is ruled constitutional, it will be hard for tobacco companies to defend themselves effectively. Meanwhile, the U.S. Justice Department yesterday told a federal judge that major tobacco firms should be forced to pay $10 billion over five years to help smokers quit - much less than the $130 billion over 25 years proposed recently by a government witness if the companies are found guilty.
Low-cost airline Ryanair was down £0.09 to £6.45 after the chief executive Michael O'Leary, on Tuesday took advantage of the recent rise in the groups share price to sell off a further 6 million shares from his holding of 41 million, the Financial Times reported. The disposal, priced at €6.50 per share, raised €39 million for O'Learys personal fortune and reduced his stake from 5.4% to 4.6% but left him still as the largest individual shareholder. Mobile telecom Vodafone was down £0.02 to £1.36, after The Times newspaper reported that the company will invest more than £1.30 billion in its struggling Japanese unit this year to stem a customer exodus and turn around its fortunes in the country. The report added that the spending plan represents a 50% increase from last year's budget, and follows the fifth consecutive month of plunging subscription numbers.
Royal Bank of Scotland was up £0.18 to £16.55 after the company said it continues to perform well in the first half of 2005, with strong overall income growth, and it sees overall credit metrics remaining stable. The bank added that underlying profit growth remained broadly consistent with a year ago. The company also restated its accounts under International Financial Reporting Standards and said income increased by 3% to £23.4 billion, while pre-tax profit rose by 5% to £7.3 billion.
Hotel and betting group Hilton was down £0.02 to £2.84, after signing two new management contracts for Beijing. The company's first luxury segment Conrad hotel in China, and a mid-market Scandic, will open in 2008.
Hedge-fund company Man Group was down £0.09 to £13.92, after the company's key AHL fund rose 3.48% in the week to June 6, a fifth consecutive weekly jump. For the last 12 months, the fund has risen 5.6%. Meanwhile, Citigroup increased its target to £16.80 from £16.70 and kept its buy rating.
Valeo, the maker of car parts, was up €0.85 to €37.10, with traders noting many orders from hedge funds on expectations private equity groups might make a bid for the company. This offsets news of a Credit Suisse First Boston downgrade to underperform from neutral. The broker maintained its €30 price target, but cut its 2005 and 2006 estimates again on the back of poor first-quarter results, poor second-quarter production in France, and continued record raw material costs.
Remy Cointreau was up €0.84 to €34.50 after the liquor group reported fiscal year 2004/2005 revenues up 1.9%, or up 5.1% like-for-like, to €905.3 million, and operating profit down 3.3%, or up 14.4% like-for-like, to €167.7 million. The company proposed a €1 dividend, to be approved on July 28, and forecast a double-digit growth in operating profit in the current year. Ahead of the release, the bank ETC Pollak Prebon expected revenues of €905.1 million, up 1.9% year over year, and operational profit down 4.3% year over year.
STMicroelectronics was up €0.31 to €13.07 after the company reportedly announced it will cut 2,300 jobs in Europe by the middle of the 2006 fiscal year in its drive to cut costs. Separately, UBS upgraded the chipmaker to buy from reduce and lifted its target to €16 from €10. Elsewhere, Texas Instruments said second-quarter sales may reach top end of forecasts as consumers buy new phones.
Tobacco group Altadis was up €0.42 to €35.72 after JP Morgan lifted its fair value target to €33 from €29, and reiterated its underweight rating. Yesterday, the company's shares rose strongly after the board appointed Jean Dominique Comolli as chairman and Antonio Vazquez, as president of the executive committee and CEO of the group. JP Morgan said that this is an improvement as it expects the company to become more aggressive in reducing costs.
Linde was up €0.94 to €59.25 after the industrial conglomerate said it is sticking to a fiscal-year forecast for earnings and sales to rise. The company said net income will increase this year from the €274 million it reported last year, and sales are expected to advance from €9.42 billion.
Postbank was up €1.12 to €40.95 after Deutsche Bank upgraded the bank's rating to buy from hold and increased the target to €45.50 from €36. After reviewing the company, the broker said that of five identified profit drivers, it believes that the company delivers on three while one looks unlikely.
Software giant SAP was up €0.12 to €138.21 after Goldman Sachs raised its 2005/2006 earnings per share estimates, saying the company's shares present an attractive long-term opportunity for investors. The broker said that the emergence of a new Web services architecture is now clearly visible on the horizon and will likely begin to accelerate industry growth over the next two to three years, leading to higher valuations for the leading software vendors, including the company.