On the Move: Nestle, Euronext, SAP
From Standard & Poor's European MarketScope
AMVESCAP was up £0.15 to £4.36. Morgan Stanley upped the stock to overweight from equalweight and switched its preferred pick to the company from Schroders. The broker said there's a much larger opportunity for cost cutting at the company than the market is penciling in.
CENTRICA was up £0.05 to £2.44. The company expects fiscal year earnings to be in line with consensus. It said gas prices for the winter months have continued to be volatile and have remained high on fears of a cold winter and gas shortages. For the year as a whole, BG's weighted average cost of gas will be around 37% higher than 2004 and its weighted average cost of electricity will be 30% higher.
VEDANTA was up £0.35 to £8.70. The company is to build a US$2.10 billion green-field 500,000 tpa aluminum smelter project together with an associated 1,215 MW captive thermal power plant in Jharsuguda, Orissa in India. On completion, this would increase the company's total aluminum smelting capacity to 900,000 tpa, placing it among the largest integrated producers of aluminum worldwide.
SUEZ (SZE ) was up €0.85 to €26.03. Morgan Stanley re-initiated coverage with an overweight rating and €30 target price, noting the company has been overlooked by the market since the summer, despite value creating initiatives by management such as the Electrabel buyout. Cheuvreux resumed with an outperform rating and €27.50 target.
EURONEXT was up €1.03 to €41.99 on news that Deutsche Boerse approached the company last weekend to propose a merger, Le Figaro reported. The German stock exchange made an informal offer to the company, which it is expected to discuss in the next few weeks with its members and banks. The article reported shareholders of both groups back the move. On Thursday the LSE rejected Macquarie's £5.80/sh bid, leaving investors wondering if the company will make a bid. FRANCE TELECOM (FTE ) was down €0.21 to €20.91. Belgium's Belgacom raised its hostile bid for Telindus to €16.60/sh in cash, beating the company's friendly bid of €15.80/sh. Telindus had originally rejected Belgacom's initial offer of €13.50/sh.
DEGUSSA was up €1.25 to €39.10. Mining group RAG plans to push through by next week the purchase of 43% in the company held by E.ON (EON ), Handelsblatt reported. An EGM on Monday will have the matter as its theme.
DAIMLERCHRYSLER (DCX ) was up €0.28 to €42.55. The company is considering cutting thousands of jobs in the coming years in addition to those already announced, Stuttgarter Zeitung said. THYSSEN KRUPP was down €0.06 to €16.99. Arcelor is reportedly to make a new offer for Dofasco in the coming days or weeks, reportedly. Reminder: on 28 November, the company announced that it will bid CAD61.5 per share for the Canadian steel producer, representing a 10% premium over the hostile bid from Arcelor.
SAP (SAP ) was down €0.48 to €154.52. US rival Oracle's (ORCL ) shares fell over 3% overnight after it posted second quarter net profit down 2% year-over-year to US$798 million, citing lower-than-expected sales and acquisition costs. JP Morgan noted that despite continued acquisitions, Oracle continues to lose substantial market share to SAP on a global basis.
BNL was up €0.04 to €2.76. Rome prosecutors opened an investigation on Unipol's chairman, Giovanni Consorte, about his role in the insurer's takeover offer for the company, Finanza & Mercati reported. Additionally, Giuseppe Mussari, chairman of Fondazione MPS, has ruled out a merger of Monte Paschi with the company, the paper added. Fondazione MPS is Monte Paschi's main shareholder with a 49% of the bank capital.
PHILIPS (PHG ) was up €0.40 to €26.70 on broker upgrades after the company announced on Tuesday that it has cut its stake in LG Philips LCD to 32.9% from 37.9%.
TNT was up €0.28 to €25.53. Morgan Stanley raised its target to €28.5 from €25.0. The broker upped 2006 and 2007 EPS estimates to €2.07 from €2.01 and to €2.32 from €2.32, respectively. It said that following structural changes, the company will have a mixed growth profile, but high returns and good free cash. Separately, the company intends to appoint DSM's CFO, Henk van Dalen, as its own CFO. Van Dalen will assume the position as of April 1 2006.
NOKIA (NOK ) was up €0.21 to €15.49. Samsung Electronics is to enter the Japanese handset market. The mobile phone producer is currently negotiating a deal with Vodafone's (VOD ) Japanese unit, Vodafone KK. The company already supplies KK's competitor DoCoMo. Separately, the company is setting up a global network support centre in Chennai, India. Meanwhile, Finnish mobile phone sales rose 21% year-over-year in November.
TANDBERG was down NOK19.20 to NOK34.30. The company warned about weak current sales as changes in demand mean sales lead-times are longer, impacting the company 's short-term performance. The company forecast sales of US$85 million in fourth quarter and EBIT of about US$16 million-US$17 million.
INDITEX was up €0.71 to €27.11. Cinco Dias highlighted that after yesterday's sales update from H&M it is now clear the company is set to overtake the Swedish group in terms of fiscal year sales this year. The newspaper quotes IBES estimates forecasting fiscal year sales of €6.73 billion at the company vs. €6.50 billion for H&M.
ALTADIS was up €0.07 to €36.00. US tobacco shares and Altria (MO ) in particular were higher yesterday as the Illinois Supreme Court overturned the US$10.1 billion verdict in Altria's Price 'Lights' case, which was viewed as a substantial victory for the tobacco industry.
NESTLE was up CHF3.50 to CHF392.50. The company established a joint venture with French outfit Lactalis to set up a dairy products business to compete against other producers such as Danone (DA ) and Emmi. The company will hold 40% of the proposed venture's shares, while Lactalis will own the rest. Sales of the new business are tabled in at €1.5 billion for the first year.
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)