Markets & Finance

Arcelor Rises on Broker Upgrade


From Standard & Poor's €opean MarketScope

Britain

Liquor company Allied Domecq was down £0.13 to £6.80 after U.S. wine and spirits group Constellation Brands ruled out bid for the company, saying that, after due diligence, it did not find sufficient value for submitting an offer.

Oil group BG was up £0.07 to £4.49 after the company is to buy Italian utility Enel's half of Brindisi LNG for €17 million cash, plus a deferred, contingent sum of about €27 million. The company reportedly said it has been encouraged by strong governmental support.

Carnival was up £0.25 to £31.34 after ABN Amro lifted its target to £33.0 from £31.0 and kept its add rating. The broker said that once again, improving yields have offset the impact of fuel costs, and added that fiscal-year guidance has been unchanged since December despite specific cost issues equivalent to 9% of earnings per share.

Health and beauty products company Bodyshop was up £0.05 to £2.34 after the company reported first-quarter total retail sales moved up 8% while first-quarter Body Shop At Home sales increased 12%. It added that that group turnover was up 23% on the same period last year. For the fiscal year it continues to plan a 15% to 20% growth in operating profit with somewhat slower growth in earnings due to an increase in the tax rate.

France

Liquor group Pernod Ricard was up €3.40 to €135.90, after U.S. drinks group Constellation Brands ruled out a counterbid for British wine and spirits group Allied Domecq. The moves leaves the way clear for Pernod Ricard to acquire the British company. Dresdner Kleinwort Wasserstein increased its target on Pernod Ricard to €141 from €116, and kept its hold rating. Societe Generale retained its buy rating, saying the company is tno longer faced with the threat of being forced to raise its initial offer.

Oil group Total was up €2.90 to €194.10 after the brokerage Cheuvreux raised its target to €220 from €210. The broker also lifted its Brent crude oil price forecasts to $48.50 from $42.00 in fiscal 2005, to $45.00 from $35.00 in 2006 and to $40.00 from $35 in 2007.

Drug maker Sanofi-Aventis was up €0.85 to €68.15 after Deutsche Bank trimmed its target to €69 from €70 and retained its hold rating. Swiss bank UBS upgraded the company to buy from neutral with a €78.00 target, saying it believes that the stock sell-off on the back of the unfavorable Lovenox summary judgement creates a buying opportunity for shares. The broker believes that the company remains undervalued. Meanwhile, JP Morgan downgraded the company to neutral from overweight and retained its fair value target of €72.

Steelmaker Arcelor was up €0.40 to €16.95 after the bank ABN Amro upgraded the company to add from reduce and raised its target price to €18.70 from €14.50.

Germany

HypoVereinsbank was down €0.24 to €21.77 after the Italian newspaper Corriere della Sera reported that the French bank Societe Generale may be ready to make a counter offer for the company, which accepted a bid from the Italian bank Unicredito. Yesterday BNP-Paribas said that market speculation that it may be interested in the Germany bank are only rumors.

Financial-services group MLP was up €0.50 to €15.99 after selling two insurance units to HBOS and Britain's Gothaer Insurance for a combined €325 million in cash. HBOS will pay €271 million, plus as much as €55 million over three years for the life insurance unit. Gothaer will pay €14 million for the general insurance unit. MLP is divesting the units in order to concentrate on selling other companies' products. MLP's entire insurance business accounted for 30% of its revenue in 2004.

Deutsche Post was up €0.18 to €19.35 after chief executive Klaus Zumwinkel, said that the company wants approval to charge higher prices to continue delivering letters to rural areas once its monopoly comes to an end in 2007.

Switzerland

Chemical and biotech company Lonza was down 3.25 Swiss francs to 73.90 francs after U.S. drugmaker Genentech said that it will pay $408 million to Biogen for an Oceanside, California-based manufacturing plant where it will make its cancer drug Avastin. As a result, investors are questioning Genentech's long-term commitment to Lonza, and whether the group will give any additional business to the group.


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