Bayer Falls on U.S. Lawsuit

Mercyalis shares gain on first day of trading; plus more of Wednesday's European stocks in the news

From Standard & Poor's European MarketScope

France SAFRAN fell €1.42 to €17.48 in Wednesday's session. The company reported third quarter sales of €2.53 billion, a rise of 9% and attributable net profit of €208 million, up8.8%. S&P Equity Research downgraded the shares to hold from buy after the stock reached its €19 target. Kepler says third quarter sales show a further new deterioration in the Communication segment during the quarter (-5.8%), mainly triggered by price deterioration in handsets. Kepler believes this could accelerate the disposal of this business unit.

MERCIALYS rose €3.02 to €21.15 on its first day of trading Wednesday. The real estate business has been spun off by Casino, whose shares were down €0.50 to €59.15.

CARREFOUR fell €0.02 to €38.27. The company will release third quarter sales today. The consensus forecast sees revenues rising to €21.16 billion, up 3.9%. Citigroup sees total sales of €21.13 billion, up 4.0%, helped by a positive forex impact, but rates the stock sell. DrKW sees sales growth of 4.1%, helped by currency gains and disposals, and maintains its hold rating.

BNP-PARIBAS fell €0.30 to €63.35. The company has reportedly acquired a 19.2% stake in Nanjing City Commercial Bank, based in the eastern Chinese city of Nanjing. The stake is understood to have cost the company 704 million yuan, or US$87 million. The deal entitles the company to a board seat.


METRO AG rose €0.29 to €40.94. The company cancelled its extraordinary board meeting on Praktiker scheduled for Oct. 18. Earlier, the company said it has no interest in buying Kingfisher. Nor is it in talks about selling Praktiker to the UK group.

SCHERING (SHR ) fell €2.19 to €51.00. The company and partner TAP Pharmaceuticals will amend extension studies to their uterine fibroid drug asoprisnil. Merck Finck believes asoprisnil will be approved based on promising phase II and III data and as the medication with asorprisnil usually prevents any invasive procedures. The broker expects the launch for fiscal 2008 and estimates peak sales of €400 million, keeping its buy rating on the stock. Goldman Sachs downgraded Schering to in-line from outperform, keeping the fair value at €52.5.

VW fell €0.67 to €48.03. The carmaker will build a new model in Emden plant having agreed with staff on annual savings of around €80 million.

DAIMLERCHRYSLER (DCX ) declined €0.45 to €42.16. General Motors' stock rose 3.7% Tuesday after investor Kirk Kerkorian won U.S. clearance to take a stake of up to 9.9% and a seat on the auto giant's board. Kerkorian has also been in the fray for Daimler stock.

BAYER (BAY ) fell €0.57 to €29.69. U.S.-based Third Wave Technologies has filed a suit against the company, seeking the right to sell hepatitis C virus products.


IMPREGILO rose €0.03 to €3.49. The company's consortium has reportedly been chosen to build the €4.4 billion Messina bridge. Astaldi and the company led the two bidding groups. Astaldi's group includes Spain's Ferrovial, while the company's includes Sacyr-Vallehermoso. Trading in the company's stock was suspended.

UNICREDIT gained €0.05 to €4.67. The company has reportedly extended its takeover offer for Bank Austria Creditanstalt (BACA) by two weeks, days after it extended its offer for BACA's parent Germany's HVB.

PIRELLI & C. was unchanged at €0.83. The company opened a new manufacturing plant in China. The plant will produce around 1.2 million truck tires per year, for the China, South-East Asia, and Australia markets. The company aims to reach a 3% market share by the end of 2006.


ASML (ASML ) added €0.17 to €13.75. The company reported third quarter net sales of €533 million, down from €610 million in the 2004 third quarter and from €763 million in the second quarter of 2005, but higher than the consensus estimate of around €512 million. Net profit was €48 million, up from €41 million in the 2004 third quarter and higher than expectations of around €38 million. Brokers were generally pleased with the results.

PHILIPS (PHG ) fell €0.30 to €21.32. Shares in LG.Philips LCD fell in Korea after flat panel inventory increased more than expected and it predicted prices will decline in the fourth quarter. Separately, the consumer electronics sector was under pressure Wednesday as Apple shares sink as sales from iPods fell short of bullish expectations.


NORSK HYDRO rose NOK9.00 to NOK683.00. Thursday's dlayed U.S. oil inventories are expected to show a 2.25 million barrel fall in distillate stocks as demand rises ahead of the winter months, according to a Bloomberg analyst survey. Gasoline supplies are also seen down 2.0 million barrels in the week ended Oct. 7. Meanwhile, WTI crude hovered around US$64.00 per barrel.

S-E BANKEN was unchanged at SEK145.00. Deutsche Bank upped its target to SEK167 from SEK153 as part of a Swedish bank sector note. The broker says the environment is getting tougher and recommends investors switch in to the company from Nordea. Shares in Nordea fell SEK0.75 to SEK76.00.


FERROVIAL fell €0.55 to €65.75. Impregilo's consortium has reportedly been chosen to build the €4.4 billion Messina bridge in Italy. The consortium includes includes Sacyr-Vallehermoso. The company was participating in a consortium with Astaldi, which apparently lost out on this project.

IBERDROLA shed €0.28 to €22.71. Endesa values at around €11 billion the assets that the company aims to buy of Endesa and Gas Natural for €8 billion, according to Endesa sources quoted by Spanish newspaper ABC. Gas Natural is forced to sell these assets if it wants regulatory approval to its takeover of Endesa, but the latter argues the assets are worth more than the company is willing to pay.


MICRONAS declined CHF3.60 to CHF43.00. Deutsche Bank downgraded the shares to sell from hold and lowered its price target to CHF41 from CHF51 after cutting 2006 EPS estimates by 27%. The broker argues that although the stock is down 15% following the recent profit warning, investors should sell shares into strength given the large exposure to the declining high-end CRT-TV segment. Lehman Brothers cut its its price target to CHF52 from CHF58 but maintains overweight on a favorable risk/reward situation, as flat TV orders improve in the fourth quarter with the ramp-up of 2 new products in 2006. Meanwhile, Citigroup reduced its price target to CHF32.80 from CHF43.80. Citi recommends selling the stock.

ROCHE fell CHF1.00 to CHF187.50. The company would be willing to discuss allowing other companies to produce Tamiflu, its antiviral treatment for avian flu, the WSJ reports citing a senior official at the company.

NESTLE declined CHF4.00 to CHF372.00. Bank Leu upped its target to CHF435 from CHF395 and keeps its buy rating.

United Kingdom

XSTRATA fell £0.40 to £13.82. Deutsche Bank downgraded the shares to hold from buy, but retains its target price of £13.75.

GLAXOSMITHKLINE (GSK ) rose £0.15 to £14.45. Dresdner KW upgraded the shares to add from hold and increased its target price to £15.50 from £12.00.

BURBERRY shed £0.28 to £3.85. Citigroup expects consensus fiscal 2006 EBITA to fall to around £150 million (EPS of 21.5p) as a result of the weaker than expected second half outlook for the Wholesale and Licence units.

SABMILLER fell £0.23 to £10.35. The company says first half financial performance was in line with management's expectations, with lager volumes up 5%. It says Miller's U.S. domestic sales to retailers (STRs) fell 0.3% in a trading environment that has become increasingly price-competitive and subject to higher input costs, both of which have affected profitability. It adds that volumes of carbonated soft drinks (CSDs) in Central America rose some 3.5%, while beer volumes fell 7%. European lager volumes rose 5% and South African beer volumes grew by almost 3%, while soft drinks rose 10%.

ASTRAZENECA (UK) (AZN ) was down £0.07 to £27.21. Dresdner KW upgraded the shares to reduce from sell and raised its target price to £25.15 from £16.0.

UNILEVER (UL ) declined £0.04 to £5.84. Citigroup upped its target to £6.70 from £6.30, and reiterated its buy opinion.

REUTERS (RTRSY ) was down £0.04 to £3.74. Goldman Sachs upped its rating on the stock to outperform from in line.

Prepared by European MarketScope reporters Zaida Espana (France), Michael Sanderson (Germany), Mariella Mongio (Italy), Alexander Wisch (Netherlands), Holly Cook (Nordic), Emma Stevenson (Spain), Pawan Girglani (Switzerland), and Rocio Opazo-Aniotz (UK)

Prepared by European MarketScope reporters Zaida Espana (France), Michael Sanderson (Germany), Mariella Mongio (Italy), Alexander Wisch (Netherlands), Holly Cook (Nordic), Emma Stevenson (Spain), Pawan Girglani (Switzerland), and Rocio Opazo-Aniotz (UK)

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