Earnings expectation for semiconductor companies in the US (page 3 of 3)

The stock remains 'Hold'.

Financials have held up relatively well closing the week unchanged. We believe that a moderate recovery of the global economies would be positive for these stocks. Interest rates might not rise as fast as previously expected while the overall sentiment shows an improvement in terms of the bad debt situation. This would, in particular have a positive impact on next year's earnings, as provisions would be lower. For the time being we stick to insurance stocks with Allianz (ALV GY; EUR 278.10) as our core recommendation. We would use a further decline in the banking stocks as a buying opportunity for investors with a higher risk appetite.

Aventis (AVE FP; EUR 75.25) reportedly sounded very confident during a roadshow in Frankfurt. Management reiterated its forecasts for CAGR sales to 2004 of 11% to 12% and 25%-30% in EPS. The main drivers are strong sales growth rates in its top ten selling products as well as an improvement in its product mix. Aventis will report 1Q02 earnings on April 30, 2002. We expect the newsflow to improve in the months to come, as detailed data will confirm the strong growth of its top selling products and the R&D day in June will reveal progress on new drugs. At current levels Aventis trades at the bottom end of industry multiples due to concerns regarding a fall in the patent protection of Allegra. Even in a worst case scenario (Allegra losing patent protection), the stock would still be trading at a 10% discount to the market. We recommend using the current weakness as a buying opportunity. We expect the stock to see a re-rating in the months ahead.

Roche (ROG VX; CHF 126.25) suffered from a rating downgrade to 'underweight' by a broker but also from profit taking ahead of Tuesday's sales figures. CSFB expects sales growth in local currency terms of 9% in Pharmaceuticals, 12% in Diagnostics and 3% in Vitamins & Fine Chemicals.

MAN (MAN GY; EUR 25.83) held its annual investor day on Thursday. Overall, management projected confidence for the full year despite a difficult first quarter. The big negatives came from a sharp decline in printing and new truck orders, however group capex is down 10%-15% and the employee rationalization program continues on track. Overall management is confident in a positive cash flow for the full year. At 3.9x 2003 EBITDA and 0.3x sales, MAN looks cheap and we would use the current weakness as a buying opportunity.