Markets & Finance

Sanofi-Aventis Rises on Drug Study


France

Drugmaker Sanofi-Aventis was up EUR 2.10 to EUR 72.70 after the breast cancer drug Taxotere has been found to significantly improve survival in a comparative study by the Journal of Clinical Oncology against the Bristol-Myers equivalent, Taxol. The study showed a median overall survival of 15.4 months with Taxotere compared to 12.7 months for paclitaxel, which is marketed by Bristol-Myers as Taxol.

Aerospace and defense giant EADS, parent of Airbus, was up EUR 0.47 to EUR 27.13 after Bloomberg reported that the company is struggling to compete with Boeing's fuel-efficient 787 for more than 20 months. Boeing has received some 185 orders in the period as oil prices soared. Meanwhile, the company, Finmeccanica, Thales and ThyssenKrypp are among potential buyers of navalsystem unit Atlas Elektronik from parent company BAE Systems, reported the Financial Times.

Food group Danone was up EUR 1.05 to EUR 88.00 as rumors concerning a possible takeover by PepsiCo re-emerged yesterday before the close, although the company said it had not been contacted by PepsiCo.

Britain

Defense contractor BAE Systems was up GBP0.08 to GBP3.23 after seven defense groups are expected to be invited on Monday to examine the books of the company's navalsystem subsidiary Atlas Elektronik, the Financial Times reported. The newspaper said that the due diligence could take at least one month. The possible bidders are Thales, Finmeccanica, EADS, Saab, ThyssenKrupp, OHB Teledata and L3 Communications. The newspaper noted that the company may not simply sell Atlas to the highest bidder, since it is sensitive to the desires of the German administration, which is Atlas's largest customer. The newspaper Le Figaro says Thales is the favourite to bag Atlas.

Oil group BP was up GBP0.09 to GBP6.33 after Merrill Lynch increased its forecast for West Texas Intermediate oil prices for 2005 to 2008. The broker also raised its long-term oil price forecast to $42 per barrel from $30 per barrel (an increase of40%), based on supply-side cartel economics. The broker believes that once the short-term tightness caused by supply-side shocks correct sometime in 2007, OPEC will return as the key driving force behind pricing. Peer Royal Dutch Shell was also up GBP0.26 to GBP18.66.

Mobile service provider O2 was up GBP0.05 to GBP1.54 after Dresdner Kleinwort Wasserstein lifted its target to GBP1.70 from GBP1.40, and kept its buy rating. Credit Suisse First Boston raised its target price to GBP1.50 from GBP1.30, and reiterated its neutral rating. The broker noted that the company's earnings momentum has slowed, and competitive risks in Germany and Ireland are growing. It pointed out that upside from current levels is dependent on bid talk turning into reality.

Germany

Commerzbank was up EUR 0.39 to EUR 21.77 after Citigroup lifted its target to EUR 25 from EUR 21 and kept its buy stance. The broker noted that the company's shares are rising above adjusted book value for the first time in years. Although investors could be tempted to take profits, the broker thinks that there is more to go for. It noted that traders reported speculation late yesterday that UK's Royal Bank of Scotland could be interested in the company and would be willing to pay EUR 23.0. The bank Merck Finck thinks that EUR 23.0 is more realistic than the EUR 30.0 heard in the past, and reiterated its "hold" rating.

Tui, a tourism, shipping and transport group, was down EUR 1.06 to EUR 19.90, The company confirmed it has held discussions with other container shipping companies, including CP Ships, on a regular basis, but said that no decisions have been taken so far. The comment came after the Financial Times and Wall Street Journal ran articles about the company's Hapag Lloyd shipping line possibly buying CP Ships for about $1.5 billon. Shares are under pressure on the view that a deal would call for a capital increase in the order of EUR 1 billion.

Insurance and asset management group Allianz was up EUR 1.47 to EUR 108.92 after Citigroup lifted its target to EUR 115 from EUR 105 and kept its hold rating. The bank highlighted that the company's shares have performed well year to date (up 11%), driven by excellent operating results as well as its gearing to favorable equity market movements.

Volkswagen was up EUR 0.76 to EUR 44.00 after the carmaker said that it reached a salary agreement with its union in Mexico, averting a potential strike. The company raised salaries at its plant in Puebla by 4.2%. Volkswagen manufactures about 1,500 Jetta cars daily at the Puebla plant. Separately, yesterday Dresdner Kleinwort Wasserstein said it has low expectations ahead of the company's analysts meeting in London on Aug. 24.

Italy

Fiat was up EUR 0.21 to EUR 7.01 on news that its truckmaking unit Iveco will sell its Hungarian bus manufacturing plant to local tycoon Gabor Szeles, Bloomberg reported, citing the daily Magyar Hirlap. Szeles, who formerly owned the plant, will buy it from Iveco and start large-scale production for the Russian market, the newspaper added.

Switzerland

Schindler was up 15.50 Swiss francs to 510.50 francs after Deutsche Bank increased its target to 570 Swiss francs from 550 francs, saying elevator and escalator maker showed solid growth, order in-take, margin expansion and gave a sound outlook statement. The broker reiterated its "buy" rating. The brokerage Cheuvreux raised its price target to 550 francs from 525 francs, and kept its outperform recommendation. The bank Zuercher Kantonalbank initiated coverage with an overweight rating.


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