ABB Gains on Profit Report
From Standard & Poor's European MarketScope
PSA fell €2.47 to €49.58. PSA reported nine months sales up 1.3% to €41.8 billion and third quarter revenues up 0.8% to €12.8 billion. The company trimmed its fiscal year operating profit target to around 4% from between 4%-4.5% before and 4.5% in fiscal 2004. Also cut fiscal year sales growth to 1% from 3% due to production cuts as sales in Western Europe fell by 1.7% in nine months05. the company plans to reduce production by 8.3% from fiscal 2004, some 110,000 units. SocGen downgrades to hold from buy and is currently reviewing its fair value. Broker says the company's profit warning is showing how crucial new models are. BNP-Paribas reduces target by 10% to €47 and keeps neutral rating. Dresdner KW cuts target to €52.0 from €55.0 and keeps hold rating.
HAVAS was up €0.01 to €3.99. Vincent Bollore ups its stake in UK's Aegis to 20.80%.
FRANCE TELECOM (FTE ) was down €0.11 to €21.64. Citigroup downgrades to hold from buy and lowers target to €23 from €26.50. Lehman cuts target to €28.0 from €29.0 and keeps overweight rating. UBS cuts target to €28.2 from €29.3 and keeps buy rating. Cheuvreux downgrades to underperform from outperform and keeps €25 target price. Trims EPS figures by 6% and says stock is unlikely to perform as the market will fear other warnings for fiscal 2006.
DEUTSCHE BANK (DB ) was up €0.15 to €76.00. The company reported forecast-beating third quarter net profit of €991 million, up 46% year-over-year, on revenues 31% higher at €6.62 billion. The company said it is confident it will meet its financial targets for the year. It aims for a pretax profit of about €6 billion. DrKW says investment bank produces the surprise. Rates stock buy.
SOFTWARE AG rose €1.52 to €37.45. The company beat analyst estimates with third quarter licence sales up 16% year-over-year at €29.2m, and said full-year license sales growth will come in at the top end of its forecast range of 10-12%. Total sales in third quarter rose 7% to €103.7 million, a touch higher than expected.
LUFTHANSA was down €0.01 to €10.97. The company bought a stake in Fraport for €170m. Holds 4.95%. Wants to increase stake to 5% in the short term.
ASM INTL (ASMI ) was up €2.11 to €13.75. The company reports third quarter net loss of €6.3 million vs €3.7 million profit a year ago as sales fall 5.1% to €174.5 million. Analysts had been expecting the company to turn a profit in third quarter. The company says fourth quarter sales will be up sequentially, but makes no comment on profitability.
ABB LTD (ABB ) was up CHF0.58 to CHF9.51. The company reports third quarter 2005 results above consensus: revenues of US$5.64 billion, +13%; EBIT of US$458 million, +81%; EBIT margin 8.1% vs 5.1%; net income US$188 million; basic EPS US$0.09. Says orders stand at US$5.74 billion, up 15%. The company is aiming to top its 2005 EBIT margin target of between 6.6% and 7.1% of sales, after a margin of 8.1% in third quarter. Following the results, Dresdner KW upgrades to buy from hold and raises the price target to CHF11 from CHF9.
GLAXOSMITHKLINE (GSK ) rose £0.38 to £14.75. Deutsche Bank lifts target to £15.20 from £14.80; repeats hold. UBS upgrades to buy from neutral and raises targetr price to £17.00 from £14.00. Raises medium term earnings outlook from mid-single digit growth to double digit growth in 2006 and 2008.
ASTRAZENECA (UK) (AZN ) was down £0.31 to £24.69. Goldman Sachs raises forecasts but says longer-term, key questions remain regarding limited earnings visibility post 2006, declining ROIC from 2006 and the strategy of the incoming CEO, David Brennan to address these issues. Ups EPS in 2005 to US$2.95 from US$2.83 (+4%); 2006 to US$3.46 from US$3.35 (+3%); 2007 US$3.57 from US$3.47 (+3%); 2008 US$3.64 from US$3.53 (+3%); 2009 US$3.76 from US$3.64 (+3%). Reiterates in line. SocGen ups fair value to £24.10 from £20.70, keep hold. UBS lowers target price to £26.00 from £26.50; retains neutral.
BAT (BTI ) was up £0.22 to £12.23. Cheuvreux ups target to £14.25 from £14, outperform. Ixis lifts target £13.70 from £13.0, retains add recommendarion. JP Morgan ups price target to £13.70 from £13.50, following better-than-expected third quarter results. Upgrades 2005 EPS estimate by 1% to 88.2p from 87.0p (+15% year-over-year) and 2006 EPS estimate by 2% to 98.0p from 95.7p (+11% year-over-year). Notes the stock trades on 14.0x 2006 p-e, less than a 5% premium to the European tobacco sector. Keeps overweight.