Oil Stocks Gain on Crude Forecasts
From Standard & Poor's European MarketScope
BP gained £0.16 to £6.48 Thursday after UBS upgraded its rating on the shares to buy from neutral and raised its price target to £7.70 from £7.00. UBS increased its Brent crude oil forecasts to US$56.35 per barrel in 2005, to US$61.75 in 2006 and to US$64 in 2007. UBS says it sees neither the prospect of a slowdown in demand nor the extra supply necessary to bring prices materially down from current levels. Meanwhile, Royal Dutch Shell gained £0.62 to £18.82 after UBS lifted its target to £20.00 from £18.75; it retains neutral on the stock.
Glaxosmithkline was up £0.04 to £13.68 after CSFB lowered its stance on the European pharma sector to market weight, from overweight. The broker explains several factors are behind the move: the upcoming verdict in the U.S. Lipitor patent challenge, a limited and weak set of sector catalysts over the balance of the year, lingering uncertainty over the direction of U.S. and UK interest rates -- all in conjunction with the sector's 15% gain this year.
Astrazeneca (UK) was down £0.08 to £26.39. Crestor could become the company's most important product, ahead of both Nexium and Seroquel, according to daily Dagens Industri. The drug could be used to treat Alzheimer's Disease in the future. In yesterday's news programme Aktuellt, Crestor's component statin was said to reduce the impact of Alzheimer in patients, reports daily.
Sanofi-Aventis fell €0.10 to €65.85 after CSFB downgraded the shares to underperform from neutral and trims target price to €62 from €68. The broker says the recent announcement that Barr and Teva plan to market an Allegra generic has tipped the balance in favor of risk. CSFB thinks that with heightened risk and few predictable catalysts in the fourth quarter, the stock is likely to drift down to a new trading range in mid to low €60 price. Meanwhile, the daily Boersen reports Sanofi is withdrawing its insulin pen from Japan due to technical problems. Meanwhile, the Breast Cancer International Research Group says a combination of Taxotere chemotherapy and Herceptin significantly improve disease-free survival in women with early-stage breast cancer.
Total climbed €2.40 to €219.60 as WTI crude oil traded at US$65.25 per barrel on ACCESS Thursday after settling at US$65.09 barrel Wednesday on Nymex. The new rise in the oil price comes following yesterday's EIA inventories, which showed a draw in crude stocks of 6.6 million barrels, vs. forecasts for a 2 million barrel draw. However, gasoline stocks showed a build of 1.9 million barrels. Today, the International Energy Agency meets in Paris to discuss the impact of opening strategic reserves to meet demand in the U.S. after Hurricane Katrina. Meanwhile, OPEC holds its monthly meeting in Vienna. Separately, UBS increased its price target to €265 from €235 and reiterated its buy rating.
Air France-KLM fell €0.21 to €14.18 as investors weigh airline shares after word that Delta Airlines and Northwest filed for bankruptcy under the US Chapter 11. The U.S. has been criticized by industry heavyweights for "propping up the walking dead" as Chapter 11 continues to provide carriers with help to restructure without cutting back capacity, says the Financial Times. The paper says Co.'s KLM and Northwest have a joint venture in the North Atlantic, of which they share all the revenues and profits. According to the FT, investors expect the two groups to merge as the industry seeks to restructure and consolidate. Separately, Le Figaro reports the accident on August 2 when an Airbus skidded in the Toronto airport runway could have been caused by a row between the pilot and the co-pilot.
AXA gained €0.07 to €22.24 after announcing the sale of its unit Advest to Merrill Lynch for US$400 million as the company says its business is better aligned with Merrill Lynch's global private client group. The acquisition is expected to be finished by the fourth quarter. Meanwhile, AXA has given Hurricane Katrina a price tag of US$200 million, which will be borne by its reinsurance unit. The reinsurance unit's CEO, Hans Peter Gerhardt, says Katrina has been the worst natural disaster to hit the insurance and reinsurance history in all its history.
Pernod Ricard rose €1.20 to €145.50 after Morgan Stanley said it is switching from Coca-Cola into the company and adding it to its global consumer staples portfolio.
Allianz fell €0.17 to €104.45 after saying it has no plans to sell its Dresdner unit, according to Die Welt, citing CEO Diekmann, who says that would goes against overall strategy. In another development, GM's finance unit GMAC will take over the company's 60% stake in insurance venture OVD GmbH, Capital magazine reports.
Siemens fell €0.63 to €62.55 after a report in Sueddeutsche Zeitung that the company is to cut more jobs at its IT unit to trim costs by €1.5 billion by 2007. In another development, Siemens has secured its first wind farm order of 600MW to FPL Energy after taking over Danish Bonus Energy, reports daily Berlingske Tidende.
Henkel fell €0.79 to €77.51 after keeping its 2005 guidance. The company will reportedly spend less on acquisitions as it integrates recent buys.
Commerzbank added €0.29 to €21.42 after Kepler upped its target to €25 vs €21 as it reiterates its buy rating.