Markets & Finance

European Energy Groups Rise


Britain

Oil group BP was up £0.13 to £5.94, after Goldman Sachs raised its fair value target to £6.0 from £5.80, and rated the company in line. The broker said that the impact of the updates to the macro assumptions lifts the 2005 earnings per share by 13%, with a smaller follow-on impact from stronger refining margins in the following years. Separately, the company is being hit by a string of lawsuits as the U.S. Chemical Safety Board revealed that alarms failed to ring at the group's Texas plant on the day of the deadliest refinery accident in more than a decade, the Financial Times reported.

Oil company Shell Transport was up £0.10 to £5.53, after Goldman Sachs increased its fair value target to £5.20 from £5.0. The broker said that the uplift to macro assumptions raise 2005 earnings per share by 10% and by 3% in the following years. The broker rates the company in line.

BG was up £0.14 to £4.73 after Goldman Sachs increased its fair value target on the oil group to £4.30 from £4.10, and retained an in line rating.

Hotel and betting group Hilton was up £0.06 to £2.93 after the Financial Times reported that the company has put 16 of its British hotels on the market with the aim of raising more than £300 million while retaining management contracts for the properties.

Music retailer HMV was up £0.10 to £2.47 after Merrill Lynch upgraded the group to buy from neutral and kept its £2.80 target. The broker said that an upgrade coupled with low multiples relative to its British peer group should be a good recipe for outperformance.

Clothing retailer French Connection was down £0.21 to £2.46 after the company reported that the British retail environment continues to be very difficult and now expects a like-for-like sales decline for the first half of around 11% in its European and British retail business. While the company sees potential for improvement in trading in the autumn from stronger ranges, it now expects pre-tax profit for the year ending Jan. 31 will be in the region of £20 million to £25 million.

France

Information technology group Unilog was up € 4.30 to € 61.05 as the company is in acquisition talks with Canada's CGI, Britain's Logica, and India's Tata Consultancy, according to the newspaper Le Figaro. The company posted fiscal 2004 sales of € 657.4 million. The daily notes three other IT companies like Sopra, GFI Informatique, and Steria are in turn possible takeover targets for the company, which declined to comment.

Oil-group Total was up €2.10 to €196.40 after Goldman Sachs raised its fair value target to €220.0 from €210.0 and kept its outperform rating. The broker also raised its fiscal 2005 Brent forecast to $50 per barrel, compared with $47 per barrel.

Champagne maker Taittinger was up € 19.90 to € 354.90 after Les Echos reported Claude Taittinger saying that despite several approaches, the Taittinger family will not sell at just any price. Claude Taittinger said that the family has not yet decided on a sale but in case of a decision, he hopes the matter will progress very quickly, according to the report.

Media group Vivendi Universal was up €0.27 to €26.33 as the company and Lagardere agree to form a new pay-TV group, which will contain all of Vivendi's pay-TV assets in France. Lagardere will own 34% of stake, but Vivendi will be the sole manager.

Germany

Drugmaker Altana was down € 7.43 to € 39.90 as the company is terminating its co-operation with Pfizer, taking back all the rights of Daxas, the smoker's lung and asthma drug. Altana said that it does not see a delay in the U.S. as a result of this development, and is sticking to its 2005 targets.

Chemical maker BASF was up € 0.70 to € 55.70 after Credit Suisse First Boston forecast a solid second quarter and reiterated its outperform rating.

Volkswagen was up € 0.54 to € 38.36 after the company has accused at least two senior employees of asking for bribes in a scandal that threatens to reach the highest levels of the group, reports the Financial Times.

Airline Lufthansa was up €0.13 to €10.29 after it lifted its fuel charge to €37

from €27 on long-haul routes from July 7, and to €9 from €7 on short-haul routes from July 8.

Carmaker Porsche was up €7.86 to €629.50, after car sales reportedly fell 7% to 2,770 units in June. Deliveries of the 911 fell 30% to 665 cars last month in the region. The company said that this is due to a bottleneck in supply and has nothing to do with sinking demand for the new 911 generation.

Italy

The bank BNL was down € 0.08 to € 2.77 as a block of 122 million of the company's shares, equivalent to a 4% stake, is currently changing hands at a price of € 2.90, a source said, adding that the buyers are rumored to be Italian. According to the newspaper Finanza & Mercati, the Italian insurer Unipol could launch a counter offer on the company backed by the company's rebel pact. Unipol's offer could be around €2.7 per share, the paper wrote, citing market talk. Unipol is expected to present its counter bid as soon as this week-end, the newspaper added. Yesterday, the bank BBVA asked the Bank of Italy for permission to increase its stake in the company to 30%.

Fashion house Valentino was up € 1.18 to €20.20 on its first day of trading in Milan after spinning off from luxury group Marzotto.

Netherlands

Brewer Heineken was up €0.30 to €25.84 as Russian brewer Ivan Taranov is being put up for auction, with a likely value of around $400 million, according to Reuters. Heineken recently reiterated that it is keen to grow business in Russia. Separately, Dresdner Kleinwort Wasserstein reportedly upgraded the company to hold from reduce and lifted its target to €24.7 from €23.0.

Royal Dutch oil group was up €0.80 to €54.80, after Goldman Sachs increased its fair value target to €52 from €50.

The bank ABN Amro was up €0.26 to €20.61 after the Wall Street Journal wrote that the company is fighting a losing battle for the Italian bank Antonveneta. The article added that this raises questions about the company's future European strategy and the openness of the Italian banking market. Meanwhile, according to the daily Finanza & Mercati, BoI could give its go-ahead to Banca Populare Italiana's mostly-share takeover bid for Banca Antonveneta as soon as tomorrow.

Nordics

Statoil was up 2.25 Norwegian kroner to 135.75 kroner, after Goldman Sachs lifted its fair value target to 120 kroner from 110 kroner, with an in-line rating. Goldman Sachs said that the second half of 2005 suggests another record quarter for European oil groups, as stronger oil prices, better refining margins and a recovery in the dollar all bode well.

Carmaker Volvo was up 4.50 Swedish kronor to 322.50 kronor after the bank UBS lifted its target to 400 kronor from 380 kronor and kept its buy rating.

Switzerland

Electronics group ABB was down 0.14 Swiss francs to 8.26 francs after Citigroup downgraded the group to sell from hold, lifting the target to 7.9 Swiss francs from 7.5 francs due to the change in the dollar-to-Swiss-franc exchange rate. The bank ING cut the company's rating to hold from buy, and trimmed the target to 8.10 Swiss francs from 8.70 francs. UBS increased its price target to 8.10 Swiss francs and kept its neutral rating. J.P. Morgan trimmed its fair value to 8.9 Swiss francs and kept its overweight recommendation.


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