Markets & Finance

Thomson Gains on Upbeat Report


From Standard & Poor's European MarketScope

France

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THOMSON (TMS) was up €0.48 to €16.69 on Friday. The company reported third quarter core business revenues of€1.495 billion, up 1% at constant forex rates. It expects strong a fourth quarter as the Services Division continues on its trend and the Systems & Equipment Division returns to growth. Thomson notes new business activities are growing ahead of expectations, offsetting slower growth in other parts of the group. It sees fourth quarter total year-over-year revenue growth (including 2005 acquisitions) in the 9%-10% range for the core business (at constant currency), and for fiscal 2005 at 8%-9%. Merrill is very pleased with the report, but reiterates its neutral rating on the stock.

SANOFI-AVENTIS (SNY) rose €0.95 to €68.65. The company won approval for Exubera - an inhalable diabetes treatment that would be the first form of treatment administered without an injection. Global sales of the compound are expected to reach US$1.4 billion in 2009. Exubera won U.S. FDA approval in September.

TOTAL (TOT) fell €6.00 to €204.50. Crude oil futures fell for a second day in the U.S. Thursday as the operating rate for refineries continues to improve. Separately, the company remains in focus as striking workers at the company's Normandy refinery, the largest in France, vote today on whether to continue their strike. The refinery has been closed for 17 days already.

Germany

FRESENIUS (FMS) fell €4.45 to €108.05. The company is to acquire German private hospital chain Helios Kliniken for €1.50 billion plus €100 million for the net cash position. Some 6% of Helios Kliniken will remain in the hands of Helios management. The company expects sales of Helios Klininken of about €1.2 billion. The company also announced the acquisition of medical devices manufacturer CliniCo.

SIEMENS rose €0.77 to €63.19. The company refuted a report it plans to take over Nortel Networks.

PREMIERE gained €0.88 to €22.86. The company had 3.4 million subscribers at the end of September, having added 96,373 subscribers in the third quarter. It reiterates that it sees up to 3.6 million subscribers by yearend.

Italy

TERNA added €0.05 to €2.05. According to Il Sole 24 Ore, on Friday the Italian government will likely announce a modification of the tax on energy transmission networks to make it less heavy for the company and Snam Rete Gas. The change will probably extend the tax to other operators in the energy distribution sector and to telecom networks including mobile operators, the paper adds. Citigroup thinks the payment of the tax could affect more than one utility, thus diluting the negative impact on Snam Rete Gas and the company.

ENEL (EN) was up €0.04 to €6.80. DrKW upped its target to €7.20 from €7.10, and rates the shares hold. Separately, according to Finanza & Mercati, the EU Commission has formalized its stop to Prime Minister Berlusconi's privatization plan, requesting more laws on the golden share. Previously, the Italian PM disclosed that the company and ENI could be the first two state assets to be sold to reduce debt. ENI (E) shed €0.05 to €22.38.

CIR rose €0.10 to €2.41. Citigroup's top buy ideas include Astaldi,Autogrill, Campari, the company, ENI, Esprinet, Interpump, Telecom Italia's savings and Unicredito.

Netherlands

PHILIPS (PHG) rose €0.08 to €21.24. Samsung forecast its first profit increase in five quarters, citing a rebound in prices for LCD displays and mobile phones. Its third quarter net profit fell 30%, which was better than expected. Philips presents its own third quarter 2005 results on Monday. ING forecasts EPS of €0.96, compared to €0.91 in third quarter of 2004. The broker reckons management will confirm the guidance provided for fourth quarter of 2005.

ABN AMRO (ABN) was up €0.33 to €19.75. The company unveiled a new group structure to reflect strategic focus on mid-market clients, including the creation of a Group Business Committee, a refined governance model, and the appointment of three new board members. CFO Tom de Swaan is to retire from the managing board to be rep1aced by Hugh Scott-Barrett in January, 2006. Kempen is pleased with the new structure, and reiterated its hold recommendation and €21.0 price target.

AEGON (AEG) rose €0.20 to €12.38. The company plans to increase the capital of its life insurance venture in China, Aegon-CNOOC, by 100 million yuan.

Nordic

HENNES & MAURITZ added SEK1.50 to SEK265.00. Ahead of the company's September sales release on Monday, Citigroup forecasts a like-for-like (same-store) sales trend up 4%, given the strong start to the autumn/winter collection, underpinned by the weak -3% year-over-year September like-for-like sales. The broker argues that the September LFL forecast risk remains on the upside, and maintains its hold recommendation and SEK285 target.

ERICSSON (ERICY) rose SEK0.40 to SEK27.50 on Samsung's strong fourth quarter outlook.

VOLVO (VOLVY) gained SEK6.00 to SEK322.00. The company is selling service company Celero Support to Coor Service Management for SEK680m, minus the company's net debt of about SEK130m. The company says the sale will lead to a capital gain of about SEK450m.

Spain

GAMESA added €0.19 to €12.14. The company has been contracted by Portuguese wind farm developer Tecneira to supply andinstall 60 MW of wind turbines. The deal is valued at€46 million.

TELEFONICA (TEF) rose €0.08 to €13.94. The company's chairman Cesar Alierta affirmed on Thursday the company's commitment to Latin America, reports Cinco Dias. He said the company will increase investment by 6%-10% to 2008 while Telefonica Moviles sees accumulated investment of over €5 billion between 2005 and 2008. Elsewhere, Italy's Mediobanca will be co-lead manager for the initial public offer of the company's Endemol,the Italian press writes, adding that Mediaset tried to buy Endemol but its offer was rejected as too low. Mediaset could now buy Endemol through the IPO.

Switzerland

NOVARTIS (NVS) fell CHF0.30 to CHF66.00. A study shows the company's Elidel cream clears eczema from the faces of patients who can't tolerate steroids, the usual treatment for the condition.

United Kingdom

HILTON rose £0.41 to £3.46. The company confirms that it has received an indicative offer from Hilton Hotels Corp., regarding the sale of Hilton International and the company is currently evaluating it. It says discussions are ongoing and subject to the resolution of a number of issues. The Times says the sale could fetch more than £3.6 billion, and would reunify the Hilton brand for the first time since 1964. It would allow the company to return a significant amount of money to shareholders while leaving its Ladbrokes gambling operation as a quoted company. Merrill Lynch says £3.60 billion would be a very good price, and reiterates its neutral rating.

BHP BILLITON (BHP) rose £0.01 to £8.05. Morgan Stanley started coverage of the shares with an overweight rating and a target price of £10.30.

RIO TINTO (RTP) fell £0.01 to £21.67. Morgan Stanley assumed coverage with overweight and a price target of £29.50, representing about 35% upside potential.

SOMERFIELD was up £0.05 to £1.93. The company and the consortium consisting of Apax Partners, Barclays Capital and the Tchenguiz Family Trust have agreed on the terms of a recommended cash offer for the company at £1.97 per share.

MORRISON (WM) rose £0.02 to £1.73. Deutsche Bank cut its target price to £1.80 from £2.0, and reiterates its hold rating. DB expects a disappointing performance and guidance from the Oct. 20 release of first half results. Prepared by European MarketScope reporters Zaida Espana (France), Michael Sanderson (Germany), Mariella Mongio (Italy), Alexander Wisch (Netherlands), Holly Cook (Nordic), Emma Stevenson (Spain), Pawan Girglani (Switzerland), and Rocio Opazo-Aniotz (UK)


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