Markets & Finance

L'Oreal Clipped on Earnings


From Standard & Poor's European MarketScope

France

L'OREAL was down €1.80 to €61.15 Tuesday. SocGen downgraded the shares to hold from buy and trimmed its target to €67 from €70 after the company unveiled nine months 2005 sales of €10.75 billion, +4.7% vs. +7.1% in the third quarter of 2005. Ixis trimmed its target to €60 from €70 and keeps its add rating. UBS says sales growth has stagnated.

MICHELIN was down €3.86 to €45.99. Citigroup trimmed its target to €50 from €55 and keeps hold rating after the company reported third quarter sales of €3.89 billion, up 4.6% year-over-year and 3.3% like-for-like, driven by a mixed price effect. Deutsche Bank also cut its target to €63 from €65 and keeps its buy rating. Cheuvreux lowered its target to €56 from €58 and keeps its outperform rating. DrKW downgrades to hold from add and cuts target to €50 from €55. The company said its third quarter performance was lower than expected, particularly in the European heavy weight replacement sector, even despite easy comparables. The company does not see a significant improvement into fourth quarter and thinks FY05 performance will be similar to that of FY04.

DASSAULT SYSTEMES was up €1.05 to €43.74. The company reported third quarter total revenue of €213.8 million, up 14% as reported and in constant currencies. EPS was higher by 14%. The company says it is on track to deliver another year of accelerating revenue growth. It adds that looking to 2006, it appears well positioned to sustain the dynamics of strong revenue and earnings growth.

Germany

MERCK was down €2.15 to €67.70. The company reported third quarter sales of €1.472 billion, up 8.8%, and net profit of €185 million, up 53%. The company made a settlement of €10 million to resolve a dispute with an Electronic Chemicals customer, plus €3.1 million in legal fees. It expects positive business development trend to continue and upgraded its guidance for the fiscal year. Says it is confident that group sales, ex VWR International, should have a growth rate in the high single-digit range, while FY op. result should improve by a double-digit rate compared to last year.

DAIMLERCHRYSLER (DCX) was down €0.16 to €40.68. MCG will weigh on third quarter profits, according to S&P Equity Research, which notes there is a lot of optimism about the company ahead of the third quarter results on expectations most of the bad news will be out this year. S&P Equity Research forecasts third quarter sales up 6.90% to €37.30 billion, but operating profits down 15.0% to €1.52 billion, with operating profits at MCG down 75% to €75 million. S&P estimates EPS of €0.71, down 32%, and maintains its hold recommendation, with a higher price target of €42 vs €40.0 previously. Yesterday the company was higher as Merrill upgraded to buy from neutral, with €48 target, as it raised EPS estimates.

UK

BP (BP) was down £0.07 to £6.10. The company reported third quarter profit of US$6.463 billion. BP says the third quarter trading environment was generally stronger than a year ago with higher oil and gas realizations and higher refining margins, but with lower retail marketing and olefins margins. It raised its quarterly dividend to 5.061p.

PRUDENTIAL (PUK) was up £0.04 to £4.86. JP Morgan reiterates its underweight stance, reflecting lofty valuation and caution ahead of tomorrow's strategy update. The broker believes that, on balance, there may be little CEO Mark Tucker can reveal to positively affect sentiment. CSFB expects reasonably robust third quarter new business figures with year-over-year growth of 16%, helped by double digit growth in all of its three regions (UK, U.S., and Asia). CSFB rates the shares neutral with a target price of £5.60.

MARCONI was up £0.19 to £3.70. The company to sell its telecommunications equipment and international services businesses to Ericsson for approximately £1.2 billion. The company will be renamed telent plc and will be Ericsson's preferred services partner in the UK. The company will return £2.75 per ordinary share to shareholders in the 2006 first quarter. It says shareholders will also continue to own 100% of the equity of telent plc, which will also retain responsibility for the UK Pension Plan. The company will inject £85 million cash into the UK Pension Plan and £490 million to be retained in escrow arrangement for the potential benefit of the UK Pension Plan.


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