From Standard & Poor's European MarketScope
LM Ericsson was up 0.80 Swedish krona to 21.50 kronor, after the wireless equipment maker posted higher-than-expected first quarter of 2005 pre-tax profit of 6.7 billion kronor, compared to a Reuters' poll forecasting pre-tax profit at 6.1 billion kronor. The number was up from 4.3 billion kronor in the first quarter of 2004. First quarter of 2005 gross margin landed at 48.5%, compared to a forecast of a decline to 44.8% from 45.6% in the fourth quarter of 2004. First quarter of 2005 net sales beat expectations amounting to 31.5 billion kronor, compared to a forecast of 30.3 billion kronor. Net sales at its systems come in at 29 billion kronor compared to 26.1 billion kronor in the first quarter of 2004. Separately, the company won a 3G deal from Taiwan's Vibo Telecom. No financial details were disclosed.
Cell-phone maker Nokia was up €0.21 to €12.57, after a series of broker upgrades. Morgan Stanley lifted its target to €11.0 from €9.50, and reiterates equal weight. Lehman Brothers increased it target to €12.90 from €12.60 and reiterated its equal weight rating. Separately, Citigroup upgraded the company to hold from sell and lifted its target to €13.0 from €10.0. UBS lifted its target to €14 from €13 and reiterated its neutral rating. Societe Generale lifted its fair value to €13 from €12.5, and reiterated its hold. Exane BNP Paribas raised its target to €12 from €10 and upgraded to neutral from underperform. Yesterday, the company posted first-quarter 2005 pre-tax profit at €1.19 billion, beating a Reuters poll expecting €983 million, though down from €1.21 billion in the first-quarter of 2004. The company's first-quarter of 2005 net sales landed at €7.4 billion, higher than the forecast of €7.134 billon and €6.625 billion in the first-quarter of 2004.
Biotech Serono was down 53.50 Swiss francs to 786 francs, after the company posted a first-quarter of 2005 loss of $567.7 million, after an unexpected $725 million charge related to the U.S. Attorney's investigation of Serostim, a drug to prevent wasting in Aids patients. Excluding the charge, operating earnings fell 11.7% to $92.7 million. Even without the charge, quarterly profits missed expectations.
Carnival cruise company was up £0.59 to £27.89, after the brokerage Cheuvreux upgraded the company to outperform outperform from underperform and kept its £29.0 target.
Drugmaker Shire Pharma was down £0.21 to £5.38 after Credit Suisse First Boston downgraded the company and Lehman Brothers upgraded it. Credit Suisse First Boston cut its rating to neutral from outperform and cut its target to £5.50 from £7.00. The broker said it has previously highlighted the strong firepower held by the company in terms of its cash pile, which returns a 1% post-tax yield, carrying a massive price-earnings ratio of 100. Therefore, the broker holds the view that if a transaction was inevitable it should leverage this fact to demonstrate clear near-term accretion to offset concerns over potential earnings volatility. The broker said it does not believe that acquiring Transkaryotic Therapeutics achieves this. The broker believes the company has swapped its cash pile for more of what it had already, i.e. near to mid-term uncertainty, but with a strong long-term outlook, beyond the timeline horizons of many investors in the current marketplace. Meanwhile, Lehman Brothers upgraded the company to overweight from underweight and increased its target to £6.10 from £5.60. The broker said it concludes the proposed acquisition makes sense and provides the company with the long-term strategy broker believes it has been lacking. Finally, Goldman Sachs suspended coverage.
Housebuilder Taylor Woodrow was up £0.07 to £2.96, on rumors of a bid from rival Persimmon. The company proved to be the London market's main talking point yesterday as its shares advanced 8.5 pence to £2.89 in heavy volume of 18 million, The Guardian reported. Traders said rumours of a bid approach from Persimmon, which was off 7.5 pence at £6.99, lay behind the rise. The newspaper reported added that this story is not new, but it does make sense. A deal would catapult Persmimmon into the FTSE 100 and a large chunk of the asking price could be financed by disposing of Taylor Woodrow's American business.
Cosmetics maker L'Oreal was down €2.80 to €56.35, after brokers cut their estimates en masse. The company reported first-quarter sales of €3.539 billion, up 1.6% on reported sales, and up 3.1% like-for-like sales, but weaker than market expectations of 6.1% like-for-like growth. Poor revenue performance was attributed to weak consumption in Europe. The company expects fiscal-year 2005 sales growth to match fiscal year 2004. Full fiscal year 2005 sales and earnings guidance is expected on April 26, when the company holds its annual general meeting. After the release, Morgan Stanley cut its target to €55 from €60, with an equal weight rating. Citigroup expressed concern about weakness in France, and kept its hold rating. Fideuram Wargny downgraded to reduce from buy. Cheuvreux trimmed its target to €66 from €68, with an outperform rating. JP Morgan downgraded to underweight from neutral. Exane BNP-Paribas cut its target to €67 from €68, with an outperform. Lehman Brothers said it sees more skepticism going forward, and has an underweight rating.
Chipmaker STMicroelectronics was up €027 to €12.09, after LM Ericsson's forecast-beating first-quarter report provided uplift to the tech sector. Separately, the company will post first-quarter of 2005 results Tuesday, April 26. JP Morgan said it is looking for sales of $2.145 billion (down 8% quarter on quarter), which is the mid-point of the company's guidance range and slightly ahead of consensus of $2.121 billion. The broker expects earnings per share to come in at $0.00, while it estimates clean earnings per share of $0.06 for the first quarter of 2005. The broker expects gross margin to decline further to 34%, and rates the company neutral. Meanwhile, UBS upgraded the company's stocks to neutral from reduce. Separately, Citigroup upgraded the European technology sector to overweight from neutral.
Grocery chain Casino was up €1.40 to €61.60, after the company said it plans to
bring together its property assets into a separate unit, which it is planning to spin-off and list separately via an ipo in the second half. Most property assets are shopping centers adjacent to Casino supermarkets and buildings housing the company's cafeteria restaurants. The new group will not include hypermarket or supermarket property.
German conglomerate Siemens was up €0.82 to €58.73 after Merrill Lynch upgraded the company to buy from neutral with a €71 price target, saying it believes it is unlikely that the news flow will deteriorate from here and any improvement in terms of restructuring or capital redeployment should be a positive for the share price. The broker added that the restructuring potential is still huge. According to Die Welt, the company's VDO Automotive unit plans to shift some car part production from a plant in Wrzburg to a new plant in Ostrava in the Czech Republic from 2006. Allegedly, VDO considers two scenarios: a partial shift of production which would trigger €28.8 million in one-off costs and save €38.1 million, while a larger production shift would cause €66.7 million in one-off costs and save €92.8m. The company only confirmed that it is building the new plant and that talks with the workers council are ongoing, according to the bank Merck Finck.
Online bank Comdirect was up €0.11 to €6.31, after the company said first-quarter profit fell 39% to €8.3 million from €13.5 million, but above Bloomberg's median estimate of €7.7 million. The company said it executed 1.6 million trades, 19% fewer compared to a year ago period. The company plans to invest €50 million in new products and services over next three years as it attempts to double pre-tax profit to around €100 million by 2009. The financial advisory business is on track with a record number of new clients (up 1,400), adding credibility to the business case.