Markets & Finance

On the Move: Sainsbury, AXA, ASML


Plus: Royal Dutch Shell, Ericsson, Novartis, and other European stocks making headlines Friday

UK

SAINSBURY was up £0.30 to £5.95... Panmure ups target to £6 from £5.70, following the acquisition of 123 million shares by Delta 2. Keeps hold. Estimates that the company has £6.61/sh per share of property and a revised NAV of 570p. Argues this is the asset that Delta 2 is interested in and with the purchase being at £5.95/sh, believes shares will trade above £6/sh. Delta (Two), investment fund backed by the Qatari government, confirms has acquired today 123 million shares in the company at a price of £5.95/sh, which is about 7.068% of the issued ordinary share capital. Adds that now holds a 25.007% stake.

WOLSELEY was up £0.44 to £13.14... Up on Hughes Supply valuation read-across - Shares gain on a positive read-across after US based Home Depot is planning to sell its Hughes Supply, which is a competitor of the company Traders say two private equity firms are planning to bid about US$10 billion for Hughes. According to analysts if assumed that Hughes Supply still had a 5% operating margin in 2005 then the PE firms are paying c.16.5x EV/EBIT against the company 's valuation of 11.6x. A trader points out that if the company 's US business is on 16.5x EBIT, it will imply that the European side is only trading on 7.5x, much low vs. European peers on around 12x.

LONMIN was up £2.05 to £41.82... Top pick in Metals for Morgan Stanley. MS raises target price to BP50.75 from £39, implying alsmost 30% upside potential. Retains overweight. The company says the stock trades on 11.4x calendarised 2008 EPS, a historically low 1.2x NPV, and just over 5x 2008 EV/EBITDA, and is the most attractively priced in the sector.

France

GROUPE FLO was up €1.51 to €14.40... Shares soars on report of lower VAT - Bbg - the company shares jump as the European Union may allow France to lower value-added tax for restaurants, Bloomberg says.

AXA (AXA) was up €0.36 to €32.51... Sees big opportunity in variable annuities - As baby boomers retire, the company is making one of the biggest pushes around the globe into variable annuities, a product with risks for insurers and a checkered past for US consumers, the WSJ reports. The company says that at the end of March, it had about US$81 billion in variable-annuity accounts in the US.

Germany

NORDDEUTSCHE was up €2.28 to €31.80... Shares jump as A-Tec takes 10% stake - with the Vienna-listed industrials group saying it intends to be a long-term investor. Some 3.7 million shares were bought at an undisclosed price.

HYPO REAL ESTATE GROUP Up €1.22 to €49.51... 'Public Finance' a shot in the arm - M. Stanley - the company 's new investment story, Public Finance, keeps Morgan Stanley overweight on the stock, lifting its target to €60 from €54. The broker anticipates 2007 ROE guidance to be upgraded to 12% and reckons the company 's 2009 ROE target of 13% will be reached one year ahead of schedule, in 2008.

Italy

ATLANTIA was up €0.28 to €25.42... Italy approves toll road changes - The Italian government has approved toll changes for Italian road operators, reports Reuters citing a source. EU internal markets commissioner Charlie McCreevy has reportedly warned Italy that reforms to its highway contracts are a deterrent to investment. Italy has 15 days to respond to the charge.

Netherlands

ROYAL DUTCH SHELL (RDS.A) Up €0.27 to €29.26... India to buy Egyptian deep-water block stake - India's cabinet has approved the c.US$380 million purchase by state-run oil explorer ONGC of a 33% stake in an Egyptian deep-water block from the company The WSJ reports this morning that the company seeks to cut spending in Nigeria by US$100 million over the next few years. France's Total has hired Merrill Lynch as an advisor on a possible bid for Western Oil Sands, La Lettre de l'Expansion reports. The company and Texaco are also interested in Western Oil Sands.

ABN AMRO (ABN) was down €0.11 to €35.57... Bank of America is being sued for allegedly colluding with the company to scupper the Royal Bank of Scotland-led consortium's €71 billion bid for the company , The Daily Telegraph reports. The company says the claim has been made in a New York court and emerged in regulatory filings this week by Barclays, whose rival €64 billion offer the company has recommended. In a separate story, the FT's irreverent Observer column says a 'feeding frenzy' has seen Dutch banks wooing worried the company customers. The column cites Rabo as claiming to have been swamped by interest. SNS is apparently telling customers it is a 'bank that prefers to remain Dutch'.

ASML (ASML) was up €0.39 to €19.60... ING ups target to €20.00 from €18.50 and keeps hold. The company 's long-awaited capital optimization plan has led broker to raise its estimates. In view of chip market uncertainty, ING believes that the stock would be fully valued at c.10x estimated fiscal 2008 EV/EBIT and a 17x estimated fiscal 2007 PER.

Nordic

ERICSSON (ERIC) was up SEK0.18 to SEK26.48... S&P upgrades credit rating to BBB+ - S&P Rating Services says after a review of the company 's operating performance and medium-term trading prospects it has raised its long and short term corporate credit rating to BBB+/A-2 from BBB-/A-3 and removed it from CreditWatch where S&P had placed the company with positive implications on June 1. The upgrade is due to S&P Rating Services expectations that the company will continue to benefit from expansion in the global mobile systems market, its strong capital structure and liquidity position, and the Sony Ericsson business.

KCI KONECRANES was up €1.25 to €31.85... €20 million order in Russia/ Lehman ups - the company announces it has booked repeat orders for €20 million from Russian container terminal company ZAO First Container Terminal, for port cranes and process cranes. Separately, Lehman Brothers lifts target to €37 from €31.5, reiterates overweight. The broker believes the company provides over 20% upside potential from current levels. Notes this follows a review of earnings forecasts, leading to range of 4% to 8% EPS upgrades for 2007-09, which now incorporate the company achieving its "long-term" margin targets by 2009. Also notes the company is outperforming its peers in the industrial crane market, expanding its market share through superior organic growth and acquisitions.

STATOIL was up NOK1.75 to NOK172.00... E85 sales/Odfjell/Gjoa approved - the company announces that sales of E85 fuel in May reached 3.6 million liters, an increase of 79% year-over-year and a record figure. the company also says it will continue to invest in ethanol pumps and that by the end of 2007 it will have more than 260 fuel stations with E85. Separately the company says it has signed a framework agreement with Odfjell Drilling in order to develop new technology. The Norwegian parliament has approved the company 's North Sea Gjoa field plan for development and operation (PDO).

Spain

BBVA was up €0.18 to €18.50... Slim denies interest / Talk of Citibank eyeing the company - Mexican billionaire Carlos Slim has denied rumors that he could be interested in buying a stake in the company The rumor section of Negocio.com says Citibank could be interested in the company

Switzerland

NOVARTIS (NVS) was up CHF0.80 to CHF69.15... Rumor of two hedge funds planning attack - Swiss website Marktpirat writes about market talk that two key hedge funds (possibly out of London and New York) planning a takeover attack on the company, arguing that debt financing has become easier. However, a trader thinks the rumor is 'low quality'. In a separate update, the company 's painkiller Prexige has significantly less impact on blood pressure than the older generic ibuprofen, a study has shown.

SYNTHES was up CHF0.30 to CHF148.90... JP Morgan initiates with neutral and CHF167 price target. The company says its market-leading position in orthopedic trauma can sustain an 11.9% top-line and 13.9% EPS compounded annual growth rate (CAGR) from 2006-2011 on broker's estimates. However, at current valuations JPM does not see sufficient new product flow or triggers to justify a re-rating.


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