Markets & Finance

Nokia Shares Gain


From Standard & Poor's European MarketScope

Nordics

Nokia gained €0.63 to €13.68 after saying it sees third quarter net sales at €8.4 billion to €8.5 billion -- up from previous guidance of €7.9 billion. The company says it saw stronger than expected mobile device volumes in the third quarter, and that average sales prices will decline less than expected in the quarter. Nokia expects mobile device volumes to grow faster than the overall market during the quarter. Separately, Danske Equities says the company is benefiting from very strong mobile terminal volume growth in emerging markets. Note that for the longer term (2006), the broker sees risk in emerging markets as no-frill services will gain ground, leading to elimination of handset subsidies to a large part of the market. It maintains its hold rating for now but is more cautious in the longer term.

United Kingdom

French Connection was up £0.42 Tuesday to £2.87 after reporting first half pre-tax profit of £5.1 million, down from £16.2 million, on revenues of £117.9 million, down from £128.2 million. The apparel concern posted EPS of 3.7 pence, vs 11.7 pence. However, the company notes group gross margin is up by 1.2% to 55.1%. It says it faced challenging six months as the UK retail environment continued to worsen, but also says the recent signs of a positive response to the Winter ranges are encouraging. Analyst Nick Bubb at Evolution Securities, who rates the stock as buy, is positive about the improving outlook, noting the stock had priced in much of the current operating weakness. Separately, trading sources note the stock could still be the object of takeover speculation.

BT Group gained £0.01 to £2.20 after JP Morgan trimmed its price target to £2.52 from £2.54, given new IFRS estimates and valuation. The broker kept its overweight recommendation on the shares, saying recent meetings with senior management confirm that BT's successful transformation is ongoing. JPMorgan also thinks the stock's valuation looks cheap when comparing its dividend to the UK bond yield.

BG PLC was down £0.15 to £5.03 after Morgan Stanley upped its price target to £5.20 from £4.80 as it raises targets on 11 groups saying that European oil refining is fundamentally undervalued. Meanwhile, BP was down £0.09 to £6.30 as Morgan Stanley raised its target on that stock to £6.70 from £6.35.

Elsewhere in the energy sector, Royal Dutch Shell fell £0.19 to £18.11. In the aftermath of Hurricane Katrina, the company says refinery operations at its Norco refinery in Louisiana will hit 95% capacity Tuesday and expects full capacity to be reached over the next few days. Separately, Morgan Stanley raised its target to £21.50 from £20.65, reiterating its overweight rating on the company, calling it one of its three best ideas in sector.

France

Total fell €3.00 to €215.10 after French transport minister Dominique Perben announced yesterday plans to reduce the oil tax or TIPP for farmers, deflecting the threat of demonstrations. Earlier this week, the finance minister Thierry Breton had called for an exceptional tax on oil groups if they do not absorb some of the highs on oil prices at the pump. Morgan Stanley raised its target on Total to €230 from €210, saying European oils refining are fundamentally undervalued.

Lafarge declined €1.00 to €70.90 after ING downgraded the shares to hold from buy and trimmed its target to €79.50 from €86. ING says the downgrades follow last week's disappointing results against current industry trends. UBS also downgraded the shares, to neutral from buy, and cut its price target to €80 from €90.

Sanofi-Aventis fell €0.45 to €66.40 after news that the company and Presco Laboratories have agreed to market a generic version of antihistamine tablets Allegra. Meanwhile, rival laboratories Barr and Teva will proceed with the distribution of a generic antihistamine which Sanofi believes infringes on its intellectual property rights.

Vivendi Universal gained €0.23 to €26.28 after announcing that first half net income rose 49% to €1.26 billion, with adjusted net income of €1.162 billion vs. only €344 in first half of 2004. CEO Jean-Bernard Levy said in a statement the company will exceed its fiscal 2005 adjusted net income forecast by around €1.8 billion. The company says the first half was driven by strength at Canal Plus and the success of World of Craft game, with good performances from Maroc Telecom and SFR.

Danone fell €1.45 to €90.30. Fideuram Wargny upgraded the shares to buy from reduce and keeps target of €125, saying the company remains one of the best bets in the food industry, but notes the capital remains vulnerable. However, the broker thinks a hostile bid for Danone is not probable.

Germany

BASF fell €1.31 to €59.44 on fresh speculation that it is mulling a bid for UK's BOC.

Allianz declined €1.50 to €103.95 after placing 20.8 million shares at €105 each, at the lower end of the offer range, raising €2.2bn to help fund the buyout of its Italian unit RAS. On the broker front, UBS cut its fair value on the stock to €118 from €123 as it reiterated its neutral rating.

DaimlerChrysler was down €1.08 to €40.85. New CEO Zetsche said he wants Mercedes to be on top of the U.S. JD Power & Associates league table. The company will reduce investment in the Mercedes and Smart brands and may lift the number of models in a bid to end declining profit. Meanwhile, Zetsche will reportedly head the Mercedes unit indefinitely, contrary to speculation that his role is a stop-gap. In another development, the company's Chrysler unit may build minivans in the U.S. for VW. The companies are in talks about the plan, with no agreement yet.

VW was down €1.20 to €43.97 after news that Christian Wulff, first minister of Lower Saxony, backs plans to reduce the company's workforce, because without the measures even more jobs may be lost, FTD reports.

Netherlands

Philips fell €0.19 to €22.20. The company's Medical Systems and Capital Health will today announce a major strategic alliance in Canada, which aims to show how the health sector and private industry can cooperate to improve access to healthcare. Separately, ahead of the company's semiconductor and consumer electronics (CE) analyst day on Sept. 15, JP Morgan expects a reiteration of semiconductors growth guidance, and a positive update on CE. The broker reiterated its overweight rating.


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