Markets & Finance

Schering Raises Profit Target


From Standard & Poor's European MarketScope

France

ARCELOR was up €0.57 to €18.84. Mittal Steel wins Ukraine's Kryvorizhstal after bidding US$4.8 billion, according to Bloomberg. The company and Mittal came neck to neck in the race for the steel mill, after raising their bids for Ukraine's Kryovorizhstal to US$4 billion. The company had originally made the highest opening bid for Ukraine's Kryvorizhstal steel mill at US$2.5 billion while Mittal and LLC Smart Group bid around US$2.08 billion. Elsewhere, Goldman upgraded the shares to outperform from neutral and upgraded the European steel sector to neutral from underweight. The broker says upcoming contract negotiations will lead to rising prices for steel producers, offsetting increases in raw material costs. Goldman says groups such as the company with multi-year contracts up for renewal could see increases of up to €80 per tonne.

TECHNIP was up €1.21 to €44.43. The company and JGC Corp. are among the main bidders for a US$1 billion contract to build a natural gas treatment plant in Iran, reports the Middle East Economic Digest.

BUSINESS OBJECTS (BOBJ) was up €0.92 to €28.57. JP Morgan raised its price target to €41 from €31 and keeps its overweight rating. The broker remains positive on the analytical sector but favors the company in the near term as it has shown better evidence of product cycle strength, and boasts more EPS upside and growth.

BNP-PARIBAS was up €0.30 to €62.50. BNP Paribas Asset Management has signed a strategic partnership with India's Sundaram Finance (SFL) whereby the BNP unit will buy a 49.90% stake in Sundaram Asset Management for a consideration of 100.38 billion rupees.

Germany

SCHERING (SHR) was up €1.35 to €51.40. The company reported nine months net sales of €3,902million, up 8% organic; and basic EPS of €2.53, up 26%. The drugmaker raised its profitability goal and now expects operating margin for fiscal 2005 to be above 17%. Dresdner KW says the company's figures are very strong, and reiterates its buy rating and €59.0 target.

RWE was up €0.91 to €52.41. Berliner Zeitung reports the company plans to spin off its water divisions Thames Water in the UK and American Water in the U.S. The newspaper also says the company plans to sell part of these water businesses.

DAIMLERCHRYSLER (DCX) was up €0.77 to €40.54. Merrill upgraded the shares to buy from neutral, with a €48 price target, as it raises its 2005 EPS estimate by 3% to €2.28 and its 2006 estimate by 11% to €3.34. It also initiated a first time 2007 EPS forecast of €3.66, for a 10% increase over 2006. Meanwhile, Merck Finck maintains its buy rating.

PORSCHE was up €8.59 to €603.99. The company will reach its goal of selling more than 100,000 cars annually earlier than 2008, its original forecast, according to AutomobilWoche, citing Porsche's marketing head, Hans Riedel.

Italy

ACEA was up €0.44 to €8.74. Suez acquired an additional 3.6% stake in the company from Schroders. The French group now controls 8.6% of the company, which is still majority-owned by the city of Rome.

UNIPOL was up €0.07 to €2.28. Corriere della Sera says the company's bid for BNL might not proceed as planned in mid-November because the regulators' approval may be delayed.

SAIPEM was up €0.32 to €11.73. The company is amongst 10 groups bidding for a US$1 billion contract to build a natural gas treatment plant in Iran, according to the Middle East Economic Digest. Other groups include Technip, JGC, Hyundai Engineering & Construction and Chiyoda, amongst others.

Netherlands

PHILIPS (PHG) was up €0.02 to €21.61. Shares in Japanese consumer electronics group Pioneer were down in Tokyo after the group said that it expected to post its biggest loss on record in 2005 due to sliding prices of DVD recorders and plasma TVs.

MITTAL STEEL (MT) was up €0.15 to €20.20. The company has won the auction for the Ukrainian steel mill VAT Kryvorizhstal with a bid of US$4.8 billion, which beat Franco-Spanish rival Arcelor's bid.

Nordic

COPENHAGEN AIRPORT was up DKK403.00 to DKK1973.00. Macquarie Airports offered DKK2,000 per share to buy the company. The tender offer starts today and will run until Dec. 9. the company's board of directors unanimously supports the bid. Danske Equities recommends accepting Macquarie's bid, as the offer is 33% above the high end of broker's fair value range. The broker maintains hold recommendation on the company's stock.

AKER KVAERNER was up NOK18.00 to NOK322.00. The company secured a contract for a turnkey delivery of a biofuel-fired power station in Scotland in a consortium with Siemens. The consortium will be the main supplier of the largest dedicated biomass power plant in the UK, which will be built in Lockerbie by E.On. E.On's investment is about €130m, of which the company's supply is about €50m.

Spain

ARCELOR (Sp) was up €0.61 to €18.86 after the news Mittal Steel won the the auction for the Ukrainian steel mill VAT Kryvorizhstal, bearing the company's competing bid.

SANTANDER was up €0.02 to €10.72. The company is in advanced negotiations to acquire a stake in Philadelphia bank Sovereign Bancorp, reports the WSJ. With nine months results due tomorrow, JP Morgan forecasts net attributable income of €3.855 billion (+5.1% year-over-year) and net operating income of €6.587 billion (+28.4% year-over-year). Ibersecurities sees nine months revenues up 30% to €13.84 billion and net profit at €3.805 billion (+3.8%).

IBERIA was down €0.03 to €2.08. The company announced that nine months net profit rose 171% to €402 million. Operating income rose 2.4% while costs rose 3.5%. Regarding its strategic plan, the company says it sees cost savings of €300 million in 2006-08 and expects staff numbers to drop 9% between 2005-08. The company adds it will provision some €280 million this year to fund staff cuts.

Switzerland

SWATCH GROUP was up CHF4.10 to CHF171.30. The company expects a record 2005 result as the months of July, August and September have been very good, Le Temps reported, citing CEO Nick Hayek. Meanwhile, SocGen upgraded the share to buy from hold and raised the fair value to CHF205 from CHG186.

KUDELSKI was up CHF1.15 to CHF47.20. The company says its Nagravision unit will work with Deutsche Telekom's T-Mobile to provide TV to mobile phones and portable players in the Czech Republic.

United Kingdom

COMPASS GROUP was up £0.06 to £1.82. Clayton, Dubilier & Rice, the U.S. private equity firm, is talking to investment banks over the possibility of making a bid for the company, The Times reports. It says the firm has not yet appointed an adviser and analysts said that it could be deterred from making a formal approach by the company's pension fund deficit of about £428 million. Cheuvreux trimmed its target price on Compass to £1.90 from £2.25 and kept its sell rating on the shares.

BP (BP) was up £0.07 to £6.14. The company reports third quarter figures on Tuesday. Lehman Brothers forecast third quarter reported net income of US$3.65 billion; adjusted EPS 13.8 pence; group operating profit of US$8.043 billion. Lehman retains its underweight rating, with a target price of £6.45.

MARCONI was up £0.11 to £3.55. Ericsson (ERICY) or Alcatel (ALA) are broadly tipped to buy the company, according to weekend press reports. An official announcement is expected tomorrow, amid concerns over the company's pension fund deficit.

VIRGIN MOBILE was down £0.02 to £2.91. The company says it is in discussions with CPW regarding the launch of nationwide Mobile Virtual Network Operator in France. It says subject to agreement, the MVNO will operate under the Virgin Mobile brand and use the Orange network. The Times says the launch, which is expected to take place at some time in the first half of 2006, will see Virgin phones sold in more than 300 Carphone stores in France, as well as in Virgin Megastores. 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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