Markets & Finance

On the Move: Northern Rock, Renault, Siemens


Plus more European stocks making headlines Friday

UK

NORTHERN ROCK was down £0.04 to £1.82... RAB Capital snaps 6% stake in the company One of London's most successful hedge fund managers emerged yesterday as a rare bull of the company, placing a £50 million bet that its share price would rally, The Times writes. The company says RAB Capital has snapped up a 6% stake. According to the Daily Telegraph, the company rejected an offer of emergency funding from JP Morgan. The paper, citing sources close to the company , says the US banking giant had only offered £500 million, although the loan is believed to have been part of a wider funding solution proposed by JPM.

KINGFISHER was down £0.03 to £1.78... The brokers cut target prices and adjust ests UBS lowers target price to £2.0 from £2.35. Keeps fiscal 2007-fiscal 2008 pretax profit at £400 million. Assumes flat B&Q second half like-for-like, down from 2%, while EBIT forecast falls 3%, offset by lower interest. Thinks that M&A activity is unlikely, but does give some view of theoretical value. Keeps neutral rating. Lehman reduces target to £2.48 from £2.75. The company says UK outlook dominated the company 's first half results. Cuts B&Q like-for-like estimates for fiscal 2008-fiscal 2009 to -1% and now expects flat profits. Adds given yesterday's sharp fall, current share price appears to value the UK

operations for practically zero, which seems aggressive. Cuts fiscal 2009 pretax profit to £389 million; forecasts -1% B&Q like-for-like. Strongly reiterates overweight rating.

BRITISH ENERGY was up £0.31 to £5.19... Shares up on Cazenove push - Cazenove has reportedly put out a punchy note on the company in which it highlights that UK forward electricity price for 2008/9 has risen by 10% in the last three weeks and is now at £42/MWh, its highest level so far this year. If broker assumes that the company sells the remainder of its 2008/9 output at £42/MWh then 2008/9 EBITDA would rise by 5% to £1.3 billion. The broker adds that another area of potential upside is the reliability of the plant. Also mentions the UK government's consultation on new nuclear is due to end on October 10 and broker says any new build will only occur on existing sites, of which the company has the most attractive ones.

France

RENAULT was up €3.16 to €99.96... Goldman Sachs reiterates Conviction Buy - Broker says that European Autos is one of the best performing sectors in 2007 and has performed robustly in the recent market correction. Believes the market is discounting 2007 operating margins and no incremental growth in industry profitability thereafter. The company says that the market appears to be assuming either a substantial slowing in global growth or is again ignoring ongoing transformational restructuring benefits. The broker sees upside of c.60% to the €150 target price.

ARCELOR-MITTAL (MT) was up €0.96 to €53.14... Lehman initiates with overweight - Lehman Brothers initiaes with overweight and a US$85 target. Despite a view that Chinese production will 'keep a lid' on global steel prices, believes the company 's geographic, operational, and product diversification should allow it to deliver more steady results through the cycle than its peers that are largely levered to the supply/demand fundamentals of just one region. In other news, the company plans to bid for coal assets in Siberia's Sakha republic, according to local media reports. Starting price is reportedly at US$1.9 billion.

PERNOD RICARD was down €3.57 to €147.98... Lehman/UBS cut targets - both keep buy - Lehman Brothers trims target to €173 from €175, overweight. Despite in line fiscal operating results, recent fx moves weigh on broker's fiscal 2008 estimates. UBS cuts target €177 from €180, keeps buy, on similar logic, also citing slightly higher interest rates.

Germany

SIEMENS (SI) was up €2.72 to €97.15... Talk of spinning off Osram / Contract update - There is unconfirmed talk of the company spinning off Osram. Meanwhile, the lighting unit is expanding its Asian manufacturing facilities by setting up a j/v in China. In other news, Canada's Bombardier and the company have won a €399 million order from Netherlands Railways for additional Sprinter trains.

DEUTSCHE BOERSE was up €2.57 to €91.10... Upping the ante in foreign clearing & settlement - the company has reportedly applied to expand its equities clearing and settlement services in the UK

, France, NL, Belgium and Portugal.

INFINEON was up €0.12 to €11.98... Sets price for secondary Qimonda offering of 25 million ADSs to US$10.92, valuing the overall issue at about US$194 million.

Italy

FIAT was up €0.64 to €19.87... Goldman Sachs ups target to €30 from €26. The company reiterates Conviction Buy for the company , noting upside of c.60% to 12-month price target. The company says the key risk to views and price targets for both companies is failure to deliver on financial targets. the company 's unit CNH has enough business outside the US for it to weather subprime woes, says CEO Sergio Marchionne. the company has sold its 1.83% stake in Mediobanca to Goldman Sachs, generating a capital gain of c. €118 million. Goldman Sachs is, this morning, selling 15 million shares in Mediobanca at €14.85-€14.95 per share. The stake will be placed with institutional investors.

FINMECCANICA was down €0.13 to €19.84... Mediobanca remains positive on the company - Market concerns and several broker comments have weighed on the stock in recent days. Mediobanca believes the current weakness is unjustified given the company 's performance and believes negative valuations by other analysts are overblown, thus reiterates buy.

Netherlands

FORTIS was up €0.83 to €27.44... Unveils rights issue for ABN financing - To finance part of the takeover of ABN Amro, the company unveils 2 for 3 rights issue of 896,181,684 new shares at €15.00 per new share. Period 25 Sep until 9 Oct. Expects listing on 15 October. The company has to raise raise €13.4 billion.

Nordics

OMX was up SEK8.00 to SEK267.00... Turbulence continues - QIA on the move - Qatar Investment Authority (QIA) says it has bought 20% in LSE and shares in the company for 'strategic' purposes. Meanwhile, Borse Dubai and Nasdaq will submit their agreement for security review at the US government's Committee in Foreign Investment in the US. Borse Dubai and Nasdaq agreed yesterday that Dubai receives Nasdaq's stake in LSE and buys 20% in Nasdaq. Meanwhile, Nasdaq will buy the company The deal signals a strive to link stock exchanges in the US, Europe, Middle East and Asia. Separately, the Swedish financial watchdog considers launching an investigation into alledged insider trading in the company 's shares on Wednesday, before the announcement of the Nasdaq / Borse Dubai agreement, Dagens Nyheter reports.

STORA ENSO was up €0.95 to €13.99... Sells North American assets for US$2.52 billion - the company sells its North American paper business for US$2.52 billion.

HENNES & MAURITZ was up SEK6.50 to SEK402.00... ABN initiates with buy - Broker sets target at SEK470. Forecasts a 2006-09 sales CAGR of 15%, up slightly compared with recent years, with margins maintained. The company says top line should mainly be driven by increased pace in store expansion. Expects a solid third quarter report 26 September. On broker's estimates the stock trades at 2008 PE of 20.4x and 2009 PE of 17.8x. Notes on a 12-month-forward PE, the company trades below its historical levels.

Spain

SANTANDER (STD) was up €0.05 to €13.45... GE makes offer for real estate assets - press - General Electric has presented an offer for all the real estate assets the company has put up for sale, according to Expansion. Adds the assets are valued at €4 billion and says GE could form an alliance with another bidder. The Guardian reports that the company, the owner of Abbey, was approached to step in with a rescue bid for Northern Rock days before the Bank of England rescue last Thursday. The company says the talks foundered after the company said it was committed to buying banks in Italy and Brazil and was only interested in growing its mortgage business organically.

UNION FENOSA was up €0.65 to €39.76... Merrill Lynch upgrades to buy from neutral with €46 target. The broker comments that the company 's shares have performed poorly against the sector in 2007, underperforming by 5% since January and 10% since April. The company says this movement belies the quality of the company 's assets and offers a clear buying opportunity.

Switzerland

NESTLE was up CHF6.50 to CHF516.50... CEO-to-be says growth target no bad thing - Paul Bulcke says he would confirm the company 's organic growth target (5-6%) over time or do more where possible.

LONZA was up CHF1.20 to CHF121.00... Holds investor event next week - A local analyst expects the company to confirm its outlook but would not be surprised to hear positive newsflow about new contracts in the biopharma sector. It is a two day event over September 27-28.


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