Finnair Rises on Strong Results
Finnair was up €0.60 to €8.05 after the company reported better-than-expected second-quarter profits and sales, thanks to demand and cost cuts. Second-quarter pre-tax profit came in at €36.3 million, from €3.7 million a year ago. Analysts in a Reuters' poll were expecting between €7 million and €20 million. The group's second-quarter net sales landed at €471.9 million, compared to expectations of €435 million, thanks to growth in Asian traffic, rising ticket prices and increase in market share at FlyNordic. The company repeated that it expects a clear operating profit for 2005.
Cable & Wireless was down £0.08 to £1.55 after the phone company agreed to acquire its smaller peer Energis for an initial cash consideration of £594 million. On completion, the company will inject approximately £35 million in cash, which is expected to be recovered within the first year after completion, to meet Energis' short-term working capital requirements. The group expects the deal to be accretive to underlying earnings per share in the first full financial year after completion and beyond.
Mobile phone service provider O2 was down £0.03 to £1.43 after Dutch telecom KPN confirmed that it has ended preliminary discussions with Deutsche Telekom regarding the possibility of KPN acquiring O2's German business, as part of a bigger deal that would involve Deutsche Telecom buying other 02 units. KPN and Deutsche Telecom confirmed that it has no current intention to make an offer for O2.
Miner Xstrata was down £0.24 to £13.28 after Citigroup said that its purchase of a 19.9% stake in Canadian mining group Falconbridge is a blocking stake, as it would make it very difficult for another predator to come in and trump the company if it decided to launch a full acquisition. The broker also said that the deal also provides Xstrata some acquisition growth to augment its internal growth and delivers nicely on the stated strategy. However, the broker believes that the stock, trading above £13, discounts most of the positive news and so it maintains its "hold" recommendation and £12.50 target.
France Telecom was up €0.31 to €25.55 after Credit Suisse First Boston raised its target price to €28.50 from €27 and kept its outperform rating. Meanwhile, the French government has approved the merger between Cegetel and Neuf Telecom, creating France's second largest telecom, capturing 45% of the national voice network and 60% of ADSL volume. The new company has been forced to keep offering the same bulk offers at the current price.
Cosmetics maker L'Oreal was down €0.50 to €63.10 after the company and some other groups have made a formal offer for Japanese household goods and cosmetics group Kanebo, valued at some $3.66 billion.
Industrial gases group Linde was up €1.65 to €60.90 after the newspaper Boersen Zeitung reported that the company is preparing a defense against a potential takeover. The reports noted that CEO Wolfgang Reitzle has reiterated that he prefers loyal, predictable shareholders, rather than financial investors. Allianz, Deutsche Bank and Commerzbank own a combined 32% in the group and they have been selling industrial stakes in other groups. Yesterday UBS raised its target on the company to €58 from €55, but maintained a neutral stance.
Insurance and asset management group Allianz was up €2.13 to €111.23 after UBS downgraded the company to neutral from buy, but raised its target price to €123 from €115. Separately, Credit Suisse First Boston upgraded the group to outperform from neutral and raised its target price to €125 from €103, as it increased its earnings estimates for the company by 8% to €11.32 per share in 2005.
Banca Populare Italiana was down €0.07 to €7.89 as the company's advisors Dresdner Kleinwort Wasserstein and Lazard are considering launching a tender to offer the company's 29.45% stake in peer Banca Antonveneta, the newspaper Finanza & Mercati reported. According to the paper, the price of the offers will likely be close to €26 to 27. Among possible buyers are the banks ABN Amro, Banca Intesa, Royal Bank of Scotland, Deutsche Bank and WestLB, the paper added.
Philips Electronics was up €0.34 to €21.98 after Cheuvreux increased its target to €22 from €21, suggesting that the stock should continue to trade sideways until operational earnings momentum returns. The broker argued that, after the divestments of further TSMC and LPL stock, and in particular the bigger-than-expected share buy-back program and the acquisition of the lighting company Lumiled, Philip's valuation warrants a somewhat higher share price target. The broker maintained its underperform rating.
Media and information group VNU, which owns ACNielsen and Billboard magazine, was up €0.33 to €25.65 after Citigroup raised its target to €30.0 from €24.5, reflecting the potential accretion to earnings and valuation. The broker said that the main question is whether the proposed deal with medical information company IMS Health will get the necessary shareholder approval, but the situation justifies sticking with a "buy" recommendation.
Roche was up 1.90 Swiss francs to 177.10 francs, as the company does not expect any impact on projected sales for its drug Tamiflu in the second half of 2005 after a study suggested that governments also stockpile GlaxoSmithKline's Relenza in case of a bird flu epidemic, according to Reuters.