From Standard & Poor's European MarketScope
Sports retailer JJB Sports was up £0.06 to £2.19, after the Daily Mail reports that that David Herro's Chicago-based activist fund manager Harris Associates has stashed a further 482,183 shares away in its locker and now holds 3.2% of the company. The report said Harris Associates' presence on the share register is bound to kick-start gossip that the company's founder chairman Dave Whelan will soon be persuaded to sell his 12% stake to a bidder.
Shell Transport was up £0.12 to £4.96, after the company yesterday announced it is lowering the price of gasoline in Argentina under pressure from the Argentine President. President Kirchner called for a boycott of the oil company several weeks ago after it increased fuel prices. Separately, Venezuela is reportedly considering opening the Tomoporo field to foreign investment and partnering with foreign companies. The new law would allow foreign companies to take up to 49% in upstream projects.
Mining group BHP Billiton was up £0.14 to £7.22 after Dresdner Kleinwort Wasserstein upgraded the company to buy from hold and raised its target to £8.00 from £7.60. The broker believes high commodity prices are sustainable over the medium term, and thinks the company's earnings per share momentum remains strong while upcoming new project approvals could provide positive catalysts for the stock. The broker said that, even after the WMC Resources acquisition, the company could still return almost $5 billion to shareholders over the next three years.
Easyjet was up £0.09 to £2.24 after the discount airline said March passenger traffic was up 28.9% to 2.6 million, with the load factor up to 91.2%. The company said total revenue for the month was £1.2 million, up 20.6% year on year. The carrier added that this was in line with its expectations.
DaimlerChrysler was down €1.70 to €32.89, as post annual general meeting dissatisfaction lingers. At the Wednesday meeting, chief executive Juergen Schrempp was heavily criticized for the development at the Mercedes division and Smart car unit. The company stuck to its guidance, but confirmed that the first quarter (which will include a loss at the Mercedes division due to a €1.2 billion Smart restructuring charge) and the second quarter will be weak. The company also published March unit sales figures for the Mercedes division. Global divisional March sales increased by 1.8% (although year-to-date, they've declined by 4.5%), but the Mercedes brand still saw a decline of 2.5% (and a decline year to date of 9.2%, partially due to problems with supplier Bosch). The carmaker today trades ex-dividend. Separately, Morgan Stanley said a Smart car break-even could add €0.40 to its earnings per share forecasts, but it questions the business plan which involves cash costs more than twice it expected. The broker said Chrysler continues to outperform its Detroit peers, but the peer-group bar is falling under competitive pressures. While the broker thinks the valuation remains attractive, better visibility on addressing the losses at Smart and Mercedes quality would go a long way to convince shareholders that today's attractive valuation does not evolve into tomorrow's value trap.
Postal service group Deutsche Post was up €0.41 to €19.40, after the company said it expects China sales growth of at least 35% to 45% in 2005 as demand for semiconductors and other products increases in Asia. China may become DHL's biggest market in Asia within the next two years, surpassing Japan, if sales rise 60% to 70% annually, according to Scott Price, head of the company's Asian-Pacific operations. He said that China sales grew by 50% to 60% last year. He described trade in and out of China as extraordinary, after its export growth rose 37% in the first two months of this year and imports rose 8.3%. DHL has about 37% of China's express delivery market.
Financial-services group AWD is up €1.48 to €36.00, after the company released fiscal-year 2004 figures. The figures were not very different from preliminary figures. Sales were slightly better having reached €691 million, compared with €686 in the preliminary figure. The released earnings before interest and taxes figure of €72 million is above the €71 million preliminary figure, while the €57.7 million pre-tax figure was only €0.1 million better than the preliminary figure. The company guided that it aims to boost fiscal year sales to €1 billion by 2008, from €691 million in 2004, and it intends to continue its strong dividend policy. It expects earnings before interest and taxes margin to rise to 13.5% to 14%. The company also plans to increase customer numbers to 2 million by 2008 and to expand consulting staff to 8,000 from 6,000.
Media group Vivendi Universal was up €0.63 to €24.03, after UBS raised target to €29.50 from €28.50 and kept its buy rating. The broker said the company's online game, World of Warcraft (WoW) has achieved more than 1.5 million subscribers since its launch in November 2004, and demand is so great that game stocks are being rationed. It said World of Warcraft could be worth up to €2 billion, but for now increases the value of Vivendi Universal Games by €750 million to €1.25 billion, and adds €0.70 to its price target. The broker expects consensus forecasts to be raised during 2005, which should drive share price performance. Separately, the newspaper La Tribune reported that telecommunications company Cegetal, which is 36.5% owned by Vivendi Universal, is in merger talks with Neuf Telecom. The move would enhance competition against Illiad's Free in the hi-speed internet access business. The broker UBS has raised its target to €29.50 from €28.50 and kept its buy rating.
Car parts maker Valeo was down € 0.83 to € 36.45, after yesterday's 5.9% late bounce on rumours that Blackstone private-equity firm had interest in the group. This rumour initially entered the market in February. A spokesperson for Valeo said the group did not comment on rumours.
Directories company PagesJaunes was up €0.36 to €19.25, after Deutsche Bank reiterated its buy rating. The broker said that after contact with the company, it does not expect the French regulator to open an inquiry into uncompetitive market conditions. The broker noted that the British situation is unique in Europe, and said that, contrary to other European operators, PagesJaunes never took advantage of its strong position to raise prices by 5% annually. The broker noted that the company's strategy is to increase prices on printed directories by only 1.5% to 2% per year. It reiterated its sell recommendation on British phone-book publisher Yell.