European Movers: Pernod Ricard, Air Berlin, UBS
ITV Down GBP0.05 to GBP0.63... UBS downgrades to sell from neutral, lowers price target to GBP0.60 from GBP0.70. Points out the UK ad market is deteriorating. Cuts 2008 TV ad market growth forecast to -2% from +1% and to -1% from 2.5% in 2009. Broker's ITV1 ad growth falls to -4.2% from -1.9% and to -5% from -1.6% in 2008/09, respectively. Says this results in a c.20% downgrade to 2009 EBIT to GBP273m, and EPS falls by 22% to 4.3p.
VODAFONE Down GBP0.07 to GBP1.51... Morgan Stanley downgrades to underweight from overweight and cuts target to GBP1.70 from GBP2.15. Says Co. is one of the most exposed to the European Commissions likely decision to bring forward (by June) a recommendation to aggressively lower Mobile Termination Rates to cost and level the playing field for challenger operators. Thinks MTR cuts are likely to be a significant drag on sector estimates from 2009 onwards.
TESCO Down GBP0.12 to GBP3.78... Fresh & Easy on the shelf Co. has halted the rollout of Fresh & Easy, its chain of US convenience stores, while it reviews the performance of the fledgling business, The Sunday Telegraph reports. Says the move will spark renewed speculation about Co.'s performance in the world's largest consumer spending market.
BRITISH AIRWAYS Down GBP0.06 to GBP2.34... The high cost of T5 chaos - Co. faces fines of up to GBP5,000 per passenger for breaking European rules by misleadng hundreds of travellers stranded at Heathrow about their compensation rights, The Times reported on Saturday. The Daily Telegraph said chaos at T5 will cost Co. over GBP20m, according to analysts, although the full cost to Co. will take weeks to emerge. Ahead of Friday's traffic figures, Citigroup expects March passenger traffic to grow by 2%, based on a capacity increase of 2% and a flat load factor of 76.3%. Expects premium traffic to rise by 5% and cargo traffic by 3%. Goldman downgrades to sell from buy, given strong oil prices, weak revenue and thus, high earnings risk. Trims target to GBP2.00 from GBP3.30. Reduces earnings est by 43% for FY09 and 46% for FY10.
FRIENDS PROVIDENT Up GBP0.03 to GBP1.24... Rejects GBP1.50 offer from JC Flowers - Co. has refjected a fresh GBP1.50 a share offer from JC Flowers arguing it significantly undervalues Co. and its prospects and does not represent a basis for discussion.
CAIRN ENERGY Up GBP0.26 to GBP28.34... ABN Amro ups target to GBP32.60 from GBP28.40, keeps buy. Says the main revelation from FY07 results is that the enhanced resource potential (EOR) from the MBA fields in Rajasthan has increased to over 300mmbbls. Adds Co. also confirmed a 9% increase in MBA gross reserves to 685mmbbls, the in place potential of the Rajasthan small and tight fields up to 1.7bn boe and first oil from the field is still on track for 2H09.
Co. posts FY profit US$1.528bn (incl US$1.537bn exceptional gain on Cairn India IPO); gross operated production 87,031 boepd; op loss US$76.3m, +18.1%. Says discussions are ongoing with the Indian government regarding the financing of the pipeline to carry crude from the Mangla oilfield in Rajasthan.
PERNOD RICARD Down EUR 2.93 to EUR 65.16... Buys Vin & Sprit for EUR 5.63bn/Lehman cuts tgt - Co. agreed to buy Sweden's Vin & Sprit for EUR 5.63bn, hence gaining the Absolut vodka brand. Co. expects the transaction to close in the middle of the year. Lehman Brothers cuts target to EUR 83 from EUR 84.50. Cuts EPS estimates by 0.3% in 2008 and 2.2% in 2009. Says that although there are further headwinds from currency movements, underlying momentum is still strong, and broker continues to see out-performance in its shares in the medium to long term. Keeps overweight.
VALEO Up EUR 0.56 to EUR 25.12... Denies report it may sell stake to Hinduja - Co. is not in talks to sell a controlling stake to India's Hinduja Group. Business Standard reported earlier that Hinduja may buy a 51% stake in Co. for as much as US$1.5bn.
STM (FR) Up EUR 0.11 to EUR 6.74... Creates j/v with Intel - Co.
, Intel and Francisco Partners completed the Numonyx j/v. Co. says it contributed its flash memory assets and businesses in NOR and NAND, including its Phase Change Memory (PCM) resources and NAND j/v interest, to Numonyx in exchange for a 48.6% equity ownership stake and US$155.6m in long-term subordinated notes.
AIR BERLIN Down EUR 0.72 to EUR 7.38... Issues profit warning - Quoting high fuel costs as the main issue, Co. has issued a profit warning, now guiding for EBIT between EUR 72m - EUR 120m, down from EUR 140m - EUR 160m.
SIEMENS Down EUR 0.23 to EUR 68.65... Faces significant expenses from Finnish power plant delays - according to FAZ.
PREMIERE Up EUR 0.32 to EUR 13.67... News Corp to raise stake - Der Spiegel - Der Spiegel reported, that News Corp. plans to raise its 19.9% stake in Co. ahead of the AGM.
TOD'S Down EUR 0.19 to EUR 38.98... Brokers cut target post FY07 results - Goldman cuts target to EUR 37.50 from EUR 39.00. On a FY basis management expects high single-digit and remains cautious on the stock rerating potential. Keeps sell recommendation. HSBC cuts target to EUR 52.00 from EUR 55.00. Regarding the sector cuts 2008-10 earnings estimates by 5% for European companies on the back of the weaker US$/EUR. Co. reported FY net profit of EUR 77.3m, up 17.0%, from 2006, with higher sales more than offsetting a fall in margins from higher contract labour costs and rents. Says that EBIT rose 11.2% to EUR 126.5m and EBITDA was up 11.3% to EUR 153.0m. Adds that sales rose 14.7% to EUR 657.1m.
BANCO POPOLARE Down EUR 1.04 to EUR 10.49... JP Morgan cuts target to EUR 16.55 from EUR 20.08. Says that as expected, with Co.'s 4Q results release, the bank lowered their 2010 target, made significant further write-downs on their riskier /doubtful positions as well as finally gave clarity to group's capital. Says that there are some bad news and some good news, but on balance thinks this is the time to buy. Credit Agricole and Co. are in exclusive talks about a j/v between their specialised Italian consumer credit subsidiaries Agos and Ducato. Co. posted a 16% drop in 2007 net profit and sold assets to boost its capital as it changes strategy to pursue less risky businesses after heavy derivatives losses at a unit. CEO Fabio Innocenzi told Sunday's Il Sole 24 Ore, that Co. is not considering the sale of any of its retail banking units, including Banca Popolare di Crema and Banca Popolare di Cremona. Switzerland's UBP and Co. have entered into a strategic partnership in alternative asset management.
RANDSTAD Up EUR 0.84 to EUR 29.67... EC extends deadline/Deutsche upgrades - The European Commission has extended the deadline to decide on the acquisition of Vedior from 3 April to 17 April to consider competition remedies. Deutsche Bank upgrades to buy from hold and lifts target to EUR 34 from EUR 25. Says momentum has come back into the sector, but feels the best way to play this is through Co. and Vedior. Estimate that post the total cost savings the stock sits on only 11x earnings when the generalists ought to sit on nearer 14x. Doesn't expect the EU commission to knock back the proposed Co./Vedior combination or require assets sales that will affect the cost savings.
ASM INTL Up EUR 0.06 to EUR 11.65... Sees 1Q08 sales and profit down q/q - Co. issues a statement regarding its AGM on 21 May, saying that 1Q sales and profit will be above 1Q07, but lower q/q. In addition, Hermes adds the following items to the AGM agenda: 1) dismissal of supervisory boards members; 2) dismissal of Chuck del Prado; 3) appointment of own 3 members on supervisory board; and 4) appointment of Farhad Moghadam as member of management board.
ROYAL DUTCH SHELL (NL) Up EUR 0.25 to EUR 21.86... Gabon union calls for nationwide strike - Reuters quotes the secretary general of Gabon's National Organisation of Petroleum Workers (ONEP); saying that union officials are calling for a nationwide strike after negotiations with a subsidiary of Co.
ended without agreement, which caused 60k bpd of production to halt. According to the EIA, the production of Gabon in 2007 reached 240k bpd.
ASTRAZENECA (SE) Up SEK3.00 to SEK222.50... SHB upgrades / Crestor success / Rivals face criticism - Handelsbanken upgrades to accumulate from reduce. Notes the shares are down 25% YTD, mainly on fears of generic launches of Seroquel and Nexium in the US. Co. is seeking a summary judgement to settle the Seroquel case ahead of a litigation trial in August, which in Handelsbanken's view will remove EPS risk in 2Q. Thinks Co. has a good chance of winning the case. Co. has stopped the Crestor JUPITER clinical study early based on a recommendation from an independent data monitoring board and the JUPITER Steering Committee. Co. says the trial will be stopped early after Crestor patients with low to normal cholesterol but raised CRP levels show clear benefits. Meanwhile Merck & Co's and Schering-Plough's rival drug Vytorin faces criticism major meeting of US cardiologists, Reuters reports.
HANDELSBANKEN Down SEK3.00 to SEK173.00... Terminates foreign exchange and fixed income trading in NY - Co. will terminate its proprietary trading in foreign exchange and fixed income securities in New York, aiming to reduce its earnings volatility. The transaction has a negative net impact of SEK279m. Says it will instead concentrate trading to Stockholm. Co. will divest a significant part of its exposure to US asset-backed securities and sell its entire exposure to asset-backed securities (AAA) secured by credit card receivables.
NOVOZYMES Up DKK15.00 to DKK442.00... Venstre wants tax benefits for foreign workers - Foreign key research workers may receive tax reductions as Venstre wants to abolish tax regulations for some key professions held by foreign employees, Danish media reports.
INDITEX Down EUR 0.35 to EUR 35.19... FY net profit tops forecasts - Co. says FY consolidated sales rose 15% y/y to EUR 9.435bn with LFL sales up 5%. Says gross sales margin was 56.7% - 48bps higher than in 2006 - while EBIT rose 22%. Adds net profit rose 25% y/y to EUR 1.25bn, ahead of consensus. Co. will propose a dividend of EUR 1.05/sh, up 25% y/y. Says sales perfornamce so far this year is in line with expectations, with store sales in local currencies up 17% in the period 1 Feb-23 Mar.
TELEFONICA Down EUR 0.34 to EUR 18.20... Regulator wants ADSL price cut - The Spanish telecoms regulator CMT is putting pressure on Co. to cut the cost of ADSL access for other operators by 69%, according to the press. Morgan Stanley cuts target to EUR 25.50 vs EUR 26.50, overweight. Co. does not intend to sell its 0.97% stake in BBVA for the time being, Expansion reports.
UBS Down CHF0.12 to CHF28.86... Expectations of write-downs, cap. increase - Co. is set to have a momentous AGM later this month and will likely publish the agenda sometime this week. There was a report in Sonntag that the bank may ask shareholders to approve a capital increase of up to CHF16bn. Derek De Vries, analyst at Merrill Lynch, expects UBS to reveal some US$11bn of further 1Q write-downs and has lowered its 2008 forecast to a loss, and argues that a capital raising at UBS is a 'real possibility'. Separately, UBS may name Swiss former justice minister Christoph Blocher as president to replace Marcel Ospel, Blick am Sonntag reported.