European Movers: Barclays, Fortis, Telefonica
BSKYB was down £0.34 to £6.57... Adds 83K net new customers in first quarter - posted first quarter net customer growth of 83,000 to 8.665 million (vs forecast of 80,000); revenue £1.185 billion, +11% (vs cons £1.16 billion); adjusted operating profit £150 million (vs cons £166 million). Expects fiscal performance to be in line.
BRITISH AIRWAYS was down £0.12 to £4.18... first half pretax profit up, sees fiscal fuel costs over £2 billion - posted first half operating profit of £556 million, +25,79%; pretax profit £593 million, +25.9%; operating margin 12.5%. Expects fiscal fuel costs expected to top £2 billion. The company says 10% operating margin on track. Revises revenue guidance to 3% to 3.5% because of the continued weakness of the US$. The company says premium traffic continues to be strong.
BARCLAYS was down £0.24 to £5.48... Panmure, Goldman Sachs bearish - Panmure Gordon says in a note that there is a clear path that leads from the current turmoil in credit markets to major trading losses for the UK banks with US mortgage and global markets exposure. the company is one of the key sells on broker's list. Also, Goldman Sachs says despite its inexpensive valuation it is reinstating the company with neutral due to uncertainty regarding the revenue outlook for BarCap. Traders note talk that the company is planning to approach the Bank of England for emergency funding. A trader reckons that the speculation is unfounded. Also, there is talk that the company is guiding down on numbers. the company was not reachable for comment.
DEXIA was down €0.54 to €19.96... UBS downgrades to sell from neutral and cuts target to €15 from €23. FSA and the company have given what broker views as excellent disclosure to suggest their impact from losses on US subprime RMBS CDOs should be low under most circumstances. However UBS would argue that negative marks to market are an issue: accounting is one of the few tools investors have at their disposal. What concerns UBS about the Heloc issue is: 1) not its size but the speed of deterioration; 2) it represents the first cracks appearing in areas where FSA has been active; and 3) broker has no way of measuring how far this can go.
SCHNEIDER was up €0.48 to €94.94... Could be a potential target for ABB - SG - Broker says that despite ABB's huge cash position (SG estimates US$5.3 billion by year-end) and its vocal acquisition strategy since December 2006, the Swiss group has not made a single deal as yet. Given ABB's premium to sector multiples, believes the group may now decide to finance a deal partly in shares. The company says this obviously opens the door to potential targets even bigger than Legrand (Buy, €28 tgt) and Rockwell. In particular, believes that the company , which trades at a 2008 P/E of 11.8x vs ABB's 19.1x, could be a very attractive target. Estimates ABB could easily pay a premium of 30% on the company 's current share price.
METRO AG was up €1.67 to €63.32... May merge department store chain with Arcandor to try to ensure the survival of the embattled units by cutting costs, Handelsblatt reports, citing unidentified bankers.
ARCANDOR was down €0.21 to €21.55... In talks to take over Metro's Kaufhof - reports Handelsblatt. Efficiency gains of €350-400 million a year are expected.
INFINEON was up €0.02 to €9.82... Talk of Micron Technology looking - Unsubstantiated rumour at this point in time.
TELECOM ITALIA was up €0.01 to €2.16... Goldman Sachs ups target for ords to €2.00 from €1.91. Trims target for savers to €1.70 from €1.72. Rates neutral. Ahead of third quarter07 figures on 8 Nov, Goldman Sachs looks for third quarter sales of €7.734 billion, EBITDA of €3.
166 billion before exceptionals, net income of €710 million (inc estimated €100 million profit on disposal from the sale of the stake in Saudi Oger). It appears unlikely that the company 's key shareholders will reach an agreement on changes to management by the company 's 8 November board meeting - when it will also examine third quarter numbers - writes Il Sole 24 Ore. While there is a general agreement that Gabriele Galateri di Genola should be nominated as chairman the controlling shareholders are divided over who to nominate as CEO.
FASTWEB was down €0.35 to €30.33... Credit Suisse cuts target to €28 from €32, reiterates underperform. Highlights disappointing third quarter results and a cut to 2007 company guidance. the company and Swisscom will be holding an investor day early next year where guidance for 2008 will be provided.
FORTIS was down €0.99 to €20.34... Looking for emergency funding: Rumour - Following UBS double-downgrade to sell from buy, traders note rumour that the company may be looking for emergency funding. UBS downgrades to sell from buy and cuts target to €18 from €33. The company says faced major subprime risks. Notes the company is one of the top 20 CDO structurers in the world. Adds while some other big players have come out with significant losses in this area, the company refuses to disclose its exposure to US subprime.
SAMPO was up €0.39 to €21.93... Cheuvreux accumulates / Renewed bid rumours - the company bucks the trend and the shares gain as traders note Cheuvreux is buying the name aggressively today. Meanwhile, rumours that the company may bid for the Swedish government's 20% stake in Nordea surface again today.
NESTE OIL was up €0.89 to €25.59... Goldman adds to conviction buy list - Goldman adds to Pan-European conviction buy list. Notes the company has underperformed the Oil & Gas sector by 19% since the beginning of June following weak refining margins. On 30 October the company reported third quarter results that were 11% below consensus estimates. The broker believes the downside risk is limited from here on. Argues, while refining margins are likely to remain volatile in the near term broker believes that the company offers the best opportunity in the sector for performance over the next six months.
ASTRAZENECA (SE) was down SEK2.50 to SEK309.00... Handelsbanken downgrades / DB cuts tgt - Handelsbanken downgrades to reduce from accumulate, cuts target to US$50 vs US$63 and cuts EPS estimate by 3-4% for 2008-'10. Sees an increased risk of downwards revisions to estimates, with all key growth-drivers disappointing. Points out fiscal guidance for Nexium was again lowered. Deutsche Bank cuts target to US$62.40 from US$64, to reflect weakened US$ and sector sentiment. The company says although third quarter EPS was ahead of consensus, fiscal 2007 guidance was unchanged. Expects 11.7% EPS growth for fiscal 2006-FY10 but 4.2% EPS growth for fiscal 2008-FY12 reflecting generic competition to key products including Seroquel and Arimidex. Keeps buy recommendation.
IBERDROLA was up €0.07 to €11.25... Investment in renewable energy - the company 's renewables division will invest €500 million in a j/v after closing the acquisition of 50% of Italian group SER, Europa Press says. The j/v is with API Nova Energia and plans to develop 7 wind farms with 350 MW of capacity. the company is preparing to strengthen its renewable energy unit after the unit floats on the stock market later this year. According to La Gaceta, the company will invest EUR 8.6 billion to install 2,000 MW pa over the next three years.
TELEFONICA was up €0.43 to €23.16... ING ups target / iPhone launch awaited - Carphone Warehouse expects to sell 10,0000 Apple iPhones when the gadget is launched in the UK next Friday, The Times reports. The iPhone will be sold through O2 UK, Carphone Warehouse and Apple stores from 9 November. ING raises target to €24 from €18, hold. Thinks the company 's guidance seems optimistic. Sees modest upside after recent re-rating. the company says it will pay a gross dividend of €0.35 per share on 14 November. The company says net value is €0.287. The Mexican government has said that the company 's investment in GTM is in accordance with the law, following accusations from Carlos Slim's Telmex that the company was not abiding by mexican foreign invesmtne laws.
ADECCO was down CHF1.00 to CHF70.10... Shares lower after mixed third quarter results - the company reports third quarter sales of €5.44 billion, below consensus of €5.58 billion. third quarter core earnings top expectations, coming in at €296 million. However, ABN Amro mentions EUR6 million of this EBIT outperformance is from higher French rebate (one-off) so the broker says the figure is in-line without this. Quarterly net profit is comfortably ahead of consensus estimates at €230 million. the company says it is launching an up to €400 million share buyback program.
STRAUMANN was up CHF7.00 to CHF327.00... third quarter sales come in shy of expectations at CHF167 million. the company sees sales growth of 21% in local currencies for this year.