Markets & Finance

Danone Falls as Pepsi Denies Bid


From Standard & Poor's European MarketScope

France

Danone was down €7.15 to €81.30 Monday after PepsiCo told French market regulator AMF on Sunday evening it is not planning to launch a bid on Co., reports Les Echos. Cheuvreux downgraded the shares to underperform from outperform and cuts target to €75 from €82. ING downgrades to hold from buy but raises target price to €80 from €77. ING says that with political support for Danone's independence, even a friendly foreign bid looks unlikely.

Sanofi-Aventis rose €0.55 to €70.55 after the company said it plans to complete a human bird-flu vaccine by the end of fiscal 2005, beating rival group Chiron. However, the company says demand for the vaccine remains very limited, as human deaths from the virus have been limited so far.

Total gained €2.50 to €206.60 after Lehman downgraded the shares to equal weight from overweight and sets a new target price at €225. Lehman notes the stock still offers 8% upside to new target price, but says the recommendation downgrade reflects the slightly higher potential upside being offered elsewhere. The broker says Total remains its preferred big cap play, saying second quarter results should show the best EPS growth out of the major oil groups.

Vivendi Universal added €0.18 to €26.50 after the company's recorded music unit Polygram loses an appeal to reverse a 2003 ruling saying it colluded with Time Warner's music unit to fix prices on tapes and compact discs of concerts by the Three Tenors.

Germany

Commerzbank was down €0.23 to €18.43 after news that the company has had its offices searched by the Frankfurt state prosecutor in connection with a money laundering inquiry, involving five current and former employees.

VW added €0.31 to €42.51 after CEO Bernd Pischetsrieder told Braunschweiger Zeitung that financial investors might be able to acquire the company, break it up and sell off the pieces. Meanwhile, former CEO Ferdinand Piech has denied any knowledge of suspected fraud at the company, in an interview with Der Spiegel.

Infineon fell €0.10 to €8.33 as brokers expect negative third quarter earnings before interest and taxes (EBIT) on Tuesday.

SAP was down €1.74 to €143.56 after Morgan Stanley downgraded the shares to equal-weight from overweight.

Deutsche Telekom was down €0.04 to €15.90 after a report that Vodafone is not interested in T-Mobile currently.

BMW rose €0.36 to €39.19 after news the company will reportedly increase prices for its cars in the U.S. by 1.4% from 2006.

Italy

ENI gained €0.35 to €23.24 after ING lifted its target price to €25.50 from €24.60. It rates the shares buy.

Telecom Italia was up €0.02 to €2.61 after CSFB resumed coverage of the stock with an outperform rating and a €2.90 target.

Netherlands

Royal Dutch Shell was €0.35 to €25.50 after Lehman upgraded its oil sector view to positive from neutral.

ABN Amro was down €0.18 to €20.98 after it announced that 6.28 million Antonveneta shares have been tendered, amounting to 2.88%, and therefore the conditions of its bid for the Italian bank (50% + 1 share) have not been fulfilled. It adds it has no intention of remaining a minority interest holder.

Nordic

Volvo was down 20.00 Swedish kronor to 334.00 kronor after Citigroup said the company's second quarter 2Q05 results are very much in-line with forecasts and a shade ahead of consensus.

Spain

Repsol YPF gained €0.26 to €23.08 after Lehman upgraded the shares to overweight and raised its price target to €27.

Endesa was down €0.10 to €18.53 after the company announces that production rose to 92,025 GWh in the first half of 2005, up 7.4% from the year-earlier period, mainly due to a 56% increase in Europe apart from Spain and a 5% increase in LatAm.

Switzerland

Roche was up 0.60 Swiss francs to 171.70 francs after Citigroup raised its price target to 195 francs from 175 francs; it rates the share buy. The broker says interim results surprised by the strength of margins in the pharmaceuticals division.

Novartis was down 0.35 Swiss francs to 62.65 francs on the news it will spend 75.5 million to build a new small-scale production plant in Switzerland.

United Kingdom

Reckitt Benckiser added £0.54 to £17.19 after announcing second quarter net revenues of £1.028 billion, up 8%; operating profit of £185m, also up 8%; net income of £144 million, up 13%; and diluted EPS of 19.3 pence, up 12%.

Pearson was up £0.08 to £6.77 as its first-half revenues came in ahead of forecast

HSBC gained £0.04 to £9.36 as S&P Equity Research upped its price target to £9.5 from £9.0 and keeps hold.

BP was up £0.16 to £6.42. Morgan Stanley estimates replacement costs operating profit of US$8.263 billion; reported net income of US$4.92 billion; adjusted EPS of US$0.26, up 39% over a year ago. The broker says benefits from the high oil price and record refining margins are expected to be partly offset by lower marketing margins and lower chemicals margins in the quarter. ING says compared to its arch rival Royal Dutch Shell, BP's results are set to be a record, with downstream refining and marketing providing an additional edge. It rates the shares buy.


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