Markets & Finance

Novartis Rises on Strong Results


From Standard & Poor's European MarketScope

Switzerland

Drugmaker Novartis was up 0.80 Swiss francs to 61.85 francs after reporting a solid second quarter. Net sales for the period came in at $7.79 billion, up 12%, and net income was $1.65 billion, up 9%. Broadly, the numbers were ahead of expectations. Following the results, the bank Dryden continues to rate the company a buy, but still prefers its peer Roche. Bank Sarasin said that the company's second-quarter results have not changed its neutral investment view on the company. The bank Kepler noted a strong first half, but wondered how sustainable momentum is, and rates the stock reduce. In another development, the Food and Drug Administration said that the company's asthma drug Foradil should have a warning. Foradil sales last year were just $320 million.

Britain

Compass Group was up £0.08 to £2.49 after Citigroup upgraded the caterer to buy from hold. The broker raised its target price to £3.0 from £2.40 and said that it believes a cultural revolution is in progress at the company. Having been top-line driven, the business is changing its focus to cash generation and the sensible (for shareholders) use of capital, according to the broker.

Shell Transport was up £0.07 to £5.52 after UBS raised its target price on the oil group to £6.00 from £5.25, and kept a neutral rating.

Barclays bank was up £0.07 to £5.78 after Standard and Poor's Equity Research increased its target price to £6.0 from £5.70, with a hold rating.

France

Automotive supplier Faurecia was up €3.55 to €61.55 after the company won a contract from DaimlerChrysler to produce door modules. Financial details of the dealremain undisclosed.

STMicroelectronics was up €0.61 to €14.99 after the company reportedly offered to take a stake in South Korea's Hynix Semiconductor from creditors in exchange for part of its chip production lines, according to a Korean newspaper. The company is said to have offered to take a 5% to 10% stake in Hynix and in exchange it would transfer part of its NOR flash memory chip production lines to Hynix. Separately, note that after the bell last night U.S. peer AMD's shares rose 2.9% after quarterly profits beat all expectations.

Arcelor was up €0.33 to €16.82 after the newspaper Expansion reported that the steelmaker is not going to take a stake in Turkish steel group Erdemir. Last year the company said it was interested in buying the 46.12% stake that the Turkish government plans to sell this year. Separately, Nippon Steel & Sumikin Stainless Steel Corp said that it plans to cut output by 35% in the third quarter to try and prop up prices, blaming China for weakness. The price of nickel fell yesterday, making a 15% fall since 3 June.

Atos Origin was up €1.55 to €56.30 after Royal Philips Electronics sold its remaining stake of about 10.3 million shares in the IT consultancy for around €550 million.

Business Objects, maker of business data software, was up €0.62 to €24.32 after appointing Sheri Anderson as vice-president and chief information officer. Anderson previously served as CIO for Xilinx and Novell.

Germany

Steelmaker Thyssen Krupp was up €0.49 to €14.80 as dealers report some switching out of the utility RWE into the company. Separately, Separately, Nippon Steel & Sumikin Stainless Steel Corp said that it plans to cut output by 35% in the third quarter to try and prop up prices.

Chipmaker Infineon was up €0.23 to €8.33 after Deutsche Bank added the company to its European Focus List ahead of an expected up-tick in the semiconductor's cycle and cyclical pick-up in DRAM prices. The broker said that new management is continuing to impress with quiet restructuring and a shift to higher value-added product. Separately, the company rejected a breach of trust allegation from Israel's Green Power Technologies, which accused the company of using its technology in its own products without permission, the newspaper Sueddeutsche Zeitung reports.

Carmaker DaimlerChrysler was up €0.74 to €34.80 after Deutsche Bank increased its target to €34 from €30, with a hold rating.

Italy

Marzotto was up €0.49 to €3.34 on takeover speculation. Shares in the textile group were suspended limit-up on talks of a struggle for control by the family members. Traders said that the group has become the target of a takeover, by a branch of the Marzotto family.

Fiat was up €0.10 to €6.58 as Italian bank Banca Intesa is keeping its options open regarding the stake in the carmaker that it will obtain when the company converts a loan in September. Elsewhere, the group's brand manager Lapo Elkann is expected to meet with foreign press today.

Netherlands

Royal Philips Electronics was up €0.27 to €22.63 after Deutsche Bank removed the company from its Pan European Focus List and added Infineon. The broker maintained a buy recommendation on the company as considers it a high quality investment, thanks to its steady move to higher margins and the more stable medical systems business. Separately, the company has sold its remaining stake of about 10.3 million shares in IT consultancy Atos Origin, which will bring a non-taxable gain of about €190 million in the third quarter.

Spain

Corporacion Dermoestetica was up €0.63 to €11.45 on continued demand for stock in the plastic-surgery group on its second day of trading in Spain. Shares jumped18.9% yesterday on their first day of trading. The offer price was €9.10 per share, already at the top end of the indicative range.

Nordic

Tanberg TV, the maker of digital broadcast systems, was down 5.25 Norwegian kroner to 84.75 kroner, after reporting results yesterday. The bank Carnegie reiterated its outperform rating and downgraded earnings per share estimates for 2005 by 3% following the results. Separately, the bank ABG Sundal Collier downgraded the company to hold from buy, saying the group appears to be fully valued after the recent rally of more than 40% from the trough in May.


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