Markets & Finance

British Airways Falls as Workers Strike


From Standard & Poor's European MarketScope

Britain

British Airways was down £0.03 to £2.89 Friday after the airline cancelled all flights into and out of London Heathrow airport until at least 6 p.m. Friday as a result of unofficial industrial action by staff in support of workers at U.S. catering company Gate Gourmet. Commenting on the strike, Dresdner Kleinwort Wasserstein recalled the wildcat strike of July, 2003, cost the airline £40 million and said that this event could have a similar impact on firm's fiscal 2006 forecast. However, the broker said that its peak earnings per share forecast and target share price are unlikely to be affected and would view any weakness as a buying opportunity.

Collins Stewart was up £1.22 to £6.34 after the broker said that it has received a number of approaches which may or may not lead to an offer for the company. Market talk suggests France's Tradition or the U.S.'s Cantor Fitzgerald as possible bidders.

Brewer Scottish & Newcastle was up £0.09 to £4.67 on talk of a tie-up with its partner, the Danish brewer Carlsberg. The Guardian newspaper said that analysts believe a deal between Carlsberg and the company will be the next big international consolidation in the brewing sector.

Ryanair was up £0.13 to £6.68 after Dutch bank ABN Amro upgraded the company to hold from reduce, saying that the stock trades close to its target price of €6.40, reflecting the momentum behind the stock and investor appreciation of management's strength.

Cleaning products company Reckitt Benckiser was up £0.32 to £17.12 after Deutsche Bank lifted its target to £20 from £19.20, and reiterated its buy rating.

France

Societe Generale was down €0.95 to €89.15 after media sources reported that the bank has acquired Russian mortgage provider DeltaCredit for $100 million in a bid to expand its retail banking presence in Russia. Financial details of the deal remain undisclosed. DeltaCredit manages some $200 million in loans.

Cosmetics group L'Oreal was down €0.70 to €63.80 as the company's U.S. division faces a possible lawsuit after a U.S. court ruled that a sales manager who refused to fire a colleague for not being "attractive" enough is protected under a fair employment act in California. Meanwhile, the brokerage Cheuvreux increased its target price to €73 from €68 and kept its outperform rating, saying that second-quarter sales rebounded after a slow first quarter, and management is confident regarding the acceleration of growth for the second half.

Germany

Insurance and asset management group Allianz was down €1.21 to €108.64 after confirming strong second-quarter net income growth. The company posted quarterly revenues of €23.7 billion, up 6.7%, and operating profit of €2.37 billion, up 18.8% year over year. The company had already disclosed second-quarter net income, which significantly exceeded expectations, on Wednesday

Steelmaker ThyssenKrupp was up €0.24 to €15.91 after its third-quarter numbers beat expectations. The group reported quarterly sales of €11.30 billion, up 12% and earnings before interest, taxes, depreciation and amortization of €941 million, up 0.8%. The company said that order intake from continuing operations increased to €10.6 billion, up 7%. It is targeting full-year sales of just over €41 billion, with pre-tax profit, excluding the effects of major disposals, acquisitions and restructuring measures, at around €1.7 billion.

Italy

Banca Populare Italiana ws down €0.09 to €8.00 after the bank's board considered yesterday whether to sell its stake in Italian peer Banca Antonveneta to Dutch bank ABN Amro or to sign the same kind of deal with another bank, namely Banca Intesa or Deutsche Bank, the Italian press reported. Also, the company is to meet Italian regulator Consob and the Bank of Italy to discuss its bids for Banca Antonveneta ahead of a new board meeting on August 19, Reuters reported, citing the newspaper Il Messaggero.

Netherlands

ING Groep was down €0.80 to €23.76 after the brokerage Cheuvreux downgraded the financial services group to underperform from outperform and trimmed its target price to €26.0 from €28.4. Separately, Lehman Brothers raised its target to €25.10 from €24.50 and kept its equal weight rating.

Spain

Wind energy group Gamesa was up €0.36 to €11.72 after winning a deal with electric utility Iberdrola to build a $111 million wind park in southeast Mexico, news agency EFE reported, citing the Federal Electricity Commission. Separately, Morgan Stanley intitiated coverage of the company with an overweight rating and a target at €13. The broker favors Gamesa over Danish rival Vestas Wind as the Spanish group has limited exposure to the GE and Siemens competitive threat.

Switzerland

Julius Baer was down 2.60 Swiss francs to 82.85 francs, after the bank reported first half assets under management of 151 billion francs, up 11%, despite the sale of its U.S. private banking unit. Net profit came in at 130 million Swiss francs, up 15%, but just below forecasts.


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