DaimlerChrysler Jumps After Earnings Report
From Standard & Poor's European MarketScope
DaimlerChrysler was up €0.72 to €41.51. Third-quarter numbers were cheered by brokers. The auto maker reports third-quarter operating profit up 38% to €1.84 billion, beating forecasts as profit at Mercedes rose 43%. Net profit fell to €755 million from €951 million, but sales were up 9% to €38.2 billion, also beating market forecasts. JP Morgan says results should reassure that the turnaround of MCG is progressing but may also fuel market concerns about the sustainability of Chrysler's performance (third-quarter production was up 13%) and cyclical peak indicators in trucks (underlying operating leverage was only 4% at the company and 8% at Volvo). JP Morgan says it continues to like the company as a well funded restructuring story with visibility on both revenue and cost improvements driving performance, although the diversified nature of the group translates into a higher than average risk profile; it kept an overweight recommendation.
Bayer was down €0.15 to €28.47. Factor Xa deal in focus as a unit sale is eyed. The company has announced a collaborative development and licence agreement for its Factor Xa inhibitor (antithrombosis drug). The drug will be developed together with Ortho-McNeill, a subsidiary of Johnson & Johnson. In another development, the company may sell its anti-infective research unit either this year or early next year, reports FTD.
Fraport was down €0.10 to €39.79. The share placing was priced at €38.40 a share and more than two times oversubscribed - says broker. Germany is selling its stake in the company -- the government will sell 10.6 million shares in an accelerated bookbuild and an additional 6 million shares through a call option. The free float will rise to 41.3%.
Saint Gobain was down €0.27 to €45.47. It cuts fiscal year guidance. Brokers trim price targets. it reports 9 month consolidated sales of €25.74 billion, up 6.9% (up 6.8% on an actual structure basis and 1.9% on a comparable structure basis). It says prices rose 1.7% and volumes increased 0.2%. Notes following the upturn in the second quarter, organic growth slowed down in the third quarter due to the high comps and the more difficult economic climate due to the strong rise in energy costs.
STM was up €0.15 to €13.89. Brokers say third-quarter was in-line. It announces third-quarter net revenues of U.S. $2.247 billion, up 0.7% (up 3.9% from last quarter); gross profit U.S. $766 million; gross margin of 34.1%; R&D expenses U.S. $401 million; operating income U.S. $102 million; net income U.S. $89 million, down 52.9%. The company notes third-quarter performance was in line with outlook and showed sequential improvements. It says it is on track to improve overall corporate performance. Sees moderate industry growth will continue in the fourth quarter and through 2006. Expects sequential average growth in the fourth quarter of between 3%-9%, with gross margin at about 36%.
JC Decaux was down €0.42 to €16.58. The company reported weak third-quarter sales on Western European slowdown. It notes sales reflect the slowdown in advertising in Western Europe this summer, down 6.4% in the third quarter and down 2.2% in the last nine months. It also notes its urban furniture division was hurt by a flaccid French advertising market. The company expects fiscal year 2005 internal growth of between 3.5% and 4%, and sees the operating margin greater than in fiscal year 2004.
Eiffage was up €1.55 to €70.50. SocGen upgrades to buy from hold and has €82 target price. The broker says the stock has come back to attractive valuation levels, offering upside of 19% to its fair value. Notes that after having shed 11% in the past month, the share price trend should reverse. The company will continue to benefit from the favourable environment in construction out to at least fiscal year 2007. In addition, there is little risk that the company will pay too much for a motorway group. It thinks management will not put the company in jeopardy by overpaying, and should continue to follow a favorable strategy for minority shareholders.
Royal Dutch Shell was up £0.31 to £17.77. Crude inventories build was above forecast - Weekly inventories data show a crude build of 4.4 million barrels vs. 2.3 million expected; gasoline was up only 0.2 million, vs. expectations of 1.4 million. Distillate showed a draw of 1.6 million barrels. The company will announce third-quarter results tomorrow. Lehman Brothers expects the company to announce an 11% increase in third-quarter EPS, the lowest amongst the majors, as benefits from the favorable environment are offset by lower production.
Boots was down £0.01 to £6.07. It reports first-half results tomorrow. Citigroup says Thursday's interims are likely to be largely irrelevant in the context of the current merger situation. Forecasts a 19% decline in BTC EBIT albeit with some first half cost weighting. Notes revenues have already been reported. Citigroup retains sell rating, fearfull of regulatory and execution risk relating to the proposed merger with Alliance UniChem.
Collins Stewart was up £0.12 to £5.97. The company says good progress has been made in resolving significant related regulatory issues regarding a potential offer for the company and in completing due diligence. Co.'s board considers that this progress is satisfactory. KKR and Blackstone are said to be behind a possible bid.
Prudential was down £0.10 to £4.76. Nine-month numbers were in line, and it keeps Egg with important role in broader UK strategy.
BP was up £0.18 to £6.27. JP Morgan cuts estimates -- it adjusted third-quarter results were below forecast, mainly due to higher corporate charges and a sharp decline in Innovenes profits. It lowers EPS forecasts by 7% for 2005 and 4%-5% for 2006-07 due to these effects, a higher effective tax rate and higher forecast E&P costs. It thinks consensus EPS for 2005 looks too high, and estimate reductions could affect sentiment on the stock. Rates overweight. Citigroup upgrades to buy from hold, but lowers target price to £7.0 from £7.10. It says improved clarity on Gulf of Mexico disruptions and higher expected cash distributions in 2006 gives greater confidence in outlook. It argues the shares continue to offer sector leading volume growth, margin progression and cash distribution potential as well as being the European play on U.S. natural gas prices.
AstraZeneca was unchanged at £25.90. Analysts expect strong top line. Citigroup forecasts third-quarter sales of U.S.$5.75 billion, up 9% and EPS of U.S.65 cents.
Fiat was down €0.04 to €6.99. Auto loss narrows in the third quarter of 2005, beating estimates. The company delivers third-quarter net revenues of €10.597 billion, up 2% year-over-year; operating result of €409, vs. €122 million loss in the same period last year; pre-tax profit of €1.036 billion, vs. €301 million loss last year; net income of €818 million, vs. €404 million loss last year. The company's auto unit reduced its loss to €85 million in the third quarter from €282 million a year ago. It expects fourth-quarter results to benefit from the contribution of the new car models launched last September. The company was expected to report a profit of €690 million, and its auto unit was expected to register a € 125 million loss (vs. a €282 million loss last year).
Sogecable was up €0.99 to €32.06. The company returns to a profit -- it made a 9 month profit of €5.7 million, vs. a loss of €106.3 million last year. Revenues rose to €1.09 billion, in line with forecasts and ahead of €1.02 billion last year. Urquijo ByV notes an improvement in digital subscriber numbers and EBITDA margin due to cost control.
Santander was down €0.05 to €10.48. JP Morgan downgrades to neutral from overweight, on concerns about the impact the Sovereign deal might have on the company's ratings. Deutsche ups target to €12.70 from €12.50; keeps buy. Says the company remains its favorite stock in the Iberian banks universe.
Roche was up CHF2.70 to CHF191.10. According to data from a Phase III study, lymph cancer treatment MabThera has been shown to work as a maintenance therapy in patients with relapsed indolent non-Hodgkin's lymphoma. The drug is marketed in the U.S. as Rituxan by Genentech and Biogen. The company plans to ask European regulators to extend the labelling of the drug in the fourth quarter.
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)