Merrill Raises Fresenius Rating

Analyst Andreas Schmidt cites the company's settlement with asbestos litigants

Fresenius (FMS ) settled with asbestos litigants all fraudulent conveyance claims arising out of the bankruptcy of W.R. Grace & Co. Merrill Lynch raised its rating on the shares to buy from neutral.

Analyst Andreas Schmidt says that under the pact, Fresenius will pay $15 million in cash to resolve pre-merger taxes of Grace, which he estimates to be around $150 million. According to the company, the total amount of an estimated $165 million is fully covered by provisions already made. Hence, no extra costs should affect this, next year's results. Schmidt strongly believes the issue is finally solved for Fresenius, and expects no future burdens. While Schmidt says the company's third quarter was "not great," it is already visible that a bottom has been reached. He sees a recovery in 2003 and thereafter. The analyst set a price target on the shares of 53 euros (about US$52.65).

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