On the Move: Alcatel, Karstadt, Remy Cointreau
From Standard & Poor's European MarketScope
REMY COINTREAU was up €2.21 to €39.24. Fideuram upgraded the company on its better-than-expected first half. The company announced first half net profit of €42.90 million, +130%; operating profit of €64.40 million, +27%. The company confirmed fiscal year guidance of a double-digit organic growth in operating profit. Fideuram Wargny upgraded it to buy from hold, and kept its €43 target price. The broker said first half results were very strong, illustrating the company's re-focusing strategy on its value-added products. It noted that the company has become the 'Hermes' of wines and spirits, an artisan of luxury.
NRJ was up €0.43 to €19.18. The company announced fiscal year net profit of € 97.50 million, +38%; operating profit €114.7 million vs. €113.8 million in fiscal 2003-04; and an operating margin of 34.6%. ETC Pollak Prebon said the results are only marginally satisfying, and said that after this summer's poor performance, the company should see good revenues growth in October-December. Ixis said results were only slightly above consensus.
AXA (AXA ) was down €0.22 to €26.57. JP Morgan downgraded the company to neutral from overweight after recent strong performance. The broker lifted its target to €27.50 from €26.10.
ALCATEL (ALA ) was up €0.11 to €10.48. Wednesday night, Texas Instruments said it expects fourth-quarter net profit to come in at 38 cents per share, at the top end of its October forecast. The company's U.S.-based peer said it sees sales amounting to between $3.56 billion and $3.71 billion in the fourth quarter, a narrower range than previously expected: $3.42 billion-$3.72 billion.
INDITEX was up €0.31 to €25.61. Deutsche Bank upped its target to €27.25 from €26.50; and kept a buy rating. Ahead of third quarter/nine month results on Tuesday, the broker said it has raised third-quarter forecasts by 4% and fiscal year forecasts by 3% due to higher store openings, larger currency benefits in second half, and a more optimistic view on gross margins. SocGen upped its fair value to &euro29.30 from €27.50 and kept the stock a buy.
SWISS RE was down CHF1.75 to CHF96.25. The company launched a CHF1 billion convertible bond to help fund the purchase of GE Insurance Solutions. Separately, Cheuvreux noted that Tropical Storm Risk forecasts a 79% probability of an above-normal Atlantic hurricane season for 2006. The broker said the good news would be continued upwards pressure on (re-)insurance rates to have a lasting impact into 2007 and said the bad news would be another potential high claims burden, which could be better absorbed by the market leaders Munich Re and the company.
NOKIA (NOK ) was up €0.26 to €15.41. Merrill Lynch lifted its price target by 9.6% to €18.3 and kept its buy recommendation. The broker believes that the market does not fully comprehend how emerging market share dominance translates directly into profit growth, resulting from new subscriber handset sales, as well as a global pick-up in emerging market handset replacement cycles.
KARSTADT was up €1.37 to €11.86. The company is examining the disposal of real estate, with an IPO an option. It is to issue a new €300 million subordinated syndicated loan, which will have 48 months maturity. Parts of the company's planned divestments are expected to be concluded earlier than scheduled, with net debt predicted to be reduced to less than €2.8 billion by the end of the year.
BAYER (BAY ) was up €0.30 to €34.35. The company predicted peak sales of more than €1 billion for its lung cancer drug Nexavar, with Phase III clinical trials starting in first half of 2006. It also sees peak sales of more than €1 billion for its Kogenate blood drug and sales potential of more than €500 million for Trasylol.
HOCHTIEF was down €0.62 to €32.38. The Hungarian government said the UK's BAA has won the tender for 75% of Budapest Airport, with an offer of £1.22 billion, beating the company and Fraport.
GENERALI was up €0.08 to €27.22. JP Morgan downgraded the stock to neutral from overweight, and raised its target price to €28.2 from €27.5.
ENI was down €0.09 to €23.61. Antonio Catricala', president of the Italian antitrust authority, is against an extension of the deadline for the company to cut its stake in Snam Rete Gas below 20% until 2012 (from 1 July 2007), Finanza & Mercati reported. Catricala' believes such a long postponement is 'extremely dangerous', although, he also thinks an extension until 2009 is acceptable, the paper added.
ROYAL BANK OF SCOTLAND was down £0.19 to £16.92. Sources noted that the stock had had a good run, but some investors appeared disappointed that a share buy back scheme was not announced. In its pre-close trading update, the company said it has continued to perform well and expects results to be in line with market expectations for 2005. It highlighted good growth in organic and total income, a continuing high level of efficiency, good overall credit metrics and delivery of expected benefits from recent acquisitions.
ASTRAZENECA (UK) (AZN ) was up £0.16 to £27.01. The company announced a global development and commercialization agreement with Protherics for the anti-sepsis product CytoFabTM. The deal is worth a potential (ex royalties) total value of £195 million to Protherics, including an initial payment of £16.3 million.
PARTY GAMING was up £0.19 to £1.36. Dresdner KW upped its target to £1.65 from £1.50, and retained a buy rating. The company said it expects revenue and EBITDA for the fiscal year to be ahead of consensus market expectations.
RIO TINTO was down £0.07 to £24.83. The company is to develop Argyle Diamonds mine, a US$760 million block cave underground project at its wholly owned Argyle diamond mine in the Kimberley region of Western Australia. It said an additional US$150 million will be spent on a related open pit cutback to enable continuity of production between the cessation of open pit mining in 2008 and the ramp up of the underground mine.
P&O was down £0.15 to £4.79. The company will replace BPB Industries in the FTSE 100.
VIRGIN MOBILE was up £0.10 to £3.55. The company's board has rejected the ntl approach arguing the offer significantly undervalues the company. Speaking in Sydney, Sir Richard Branson said the board is seeking a better offer from ntl but a deal would eventually be reached. Ntl confirmed preliminary discussions with the company regarding a possible bid at £817 million (£3.23 per share).
ING GROEP (ING ) was down €0.07 to €28.68. The company launched a cash tender offer to buy back up to US$1.2 billion (€1.0 billion) in outstanding legacy debt securities issued by two predecessors of the company's U.S. subsidiary, Lion Connecticut Holdings. The funds will be used to refinance the company's debt and reduce interest expenses, while offering investors an early exit option from securities with low liquidity.
Prepared by Zaida Espana, Valerie Vidal, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, Julien Manrique, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)