We would advise investors, which got in at the recommended price to start take some partial profit. However given the good momentum we will keep the stock on our recommendation list for the time being.
We also removed Adecco (ADEN VX; CHF 54) after we have advised to take partial profit when the stock reached our target price of CHF 75 and CHF 80.
Adecco has issued a statement on Monday saying it has delayed the completion of its 2003 audit for three reasons: 1) Identified material weakness in internal controls in the North American operations of Adecco Staffing, 2) Resolution of possible accounting, control and compliance issues in the companies operations in certain countries and 3) Completion of the companies efforts to address these matters and determine their effect on its financial statements.
As a consequence and as could have been expected with these kind of issues the stock got hit heavily. According to CSFB, if no profit to the US operations is ever attached, Adecco's value would equate around CHF 50. CSFB also states that Adecco's cash flow (Adecco has EUR1bn of cash on balance sheet) has been robust and the company was able to halve its net debt during the last three years.
Although the share price reaction has been sharp, a lot of uncertainty still surrounds the financial outlook and we would expect the stock to remain under pressure until the issues are clarified. Therefore, we would remain cautious and prefer to get full insight into what is going on before entering into new positions.
Ahead of the official date 22 January 04, SAP AG (SAP GY; EUR 133.74) released preliminary figures for Q4 2004. Although the figures matched the official estimates given by Bloomberg, the stock got sold down as expectations got ahead of the fundamentals.
Overall the figures are good with license and total revenues in line with consensus forecast but with significantly better than expected margins which demonstrates the leverage inherent in the model.
Details are due on January 22 including some indications for the future. CSFB increased its target price from EUR 140 to EUR 150. CSFB maintains its 11% ex currency license growth forecast for 04 but with operating margins of 28.4% (vs 27.6% previous) its 04 EPS forecast rises from EUR 4.25 to 4.36. The stock currently trades at 31.7x 04 estimates and according to CSFB is as such below its upgrade multiple peak of around 35x.
We would expect some consolidation around the EUR 130 level and we maintain our positive view given SAP's status as a market leader and the fact that corporate spending is slowly picking up. We have increased our target price to EUR 153 on 6 January with a 12 months view. We reiterate our buy.
CSFB upgraded last week Europe telecoms to overweight from market weight as they see the mobile industry to continue to grow at above GDP levels with an increasing proportion of growth from next generation services.
Our two recommendations in this sector are Vodafone (VOD LN; GBP 1.4425) and France Telecom (FTE FP; EUR 23.24). Vodafone retreated slightly after touching resistance of GBP 1.50. As mentioned earlier, we would use the pullbacks towards the GBP 1.40 level for adding to new positions.
Morgan Stanley raised last week its target price from GBP 1.57 to GBP 1.80. We have raised our target price to GBP 1.66 in the first week of January and reiterate our buy at this point in time with a potential upside of 15%.
We added Allianz (ALV GY; EUR 108.62) and ING Groep NV (INGA NA; EUR 20.43) to our recommendation list. Please note this does not reflect a fundamental call on the insurance sector in general. We see it more as a play on the current positive momentum in the insurance/banking sector.
Allianz surprised the market in the last couple of days with the announcement of the sale of non-core units, which shows the determination by the management to focus on its core business. In addition we would expect a rerating of its Dresdner bank after the sharp cost cutting and expectations for a fall in loan provisions. We attach a target price of EUR 125 and a stop-loss of EUR 95.
ING offers one of the best risk/reward ratios in the sector with attractive valuation and support to earnings from the recent and ongoing restructuring and an improving equity market backdrop. We attach a target price of EUR 23 and a stop-loss of EUR 18.45.
Browse
related articles
Buy US insurance and banking (page 3 of 3)
- Tuesday, January 20 - 2004 at 15:44
Related content
Article Options
Credit Suisse, Private BankingTuesday, January 20 - 2004 at 15:44 UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of AME Info FZ LLC / 4C.
This article was updated on Mon Apr 23 2007.
Notes and Media Contacts »
Disclaimer:
The material in this document is for information purposes only and is not an offer to sell or a solicitation to buy any securities. It was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, Credit Suisse does not represent that it is accurate or complete and it should not be relied upon as such. All opinions expressed and facts referred to herein are subject to change without notice. Credit Suisse assumes no fiduciary responsibility or liability for any consequences financial or otherwise arising from trading in securities if opinions and information in this document may be relied upon.
This report does not constitute a prospectus and is not intended to provide the sole basis for any evaluation of the securities discussed herein. All estimates and opinions included in this report constitute our judgement as of the date of the report and may be subject to change without notice. Credit Suisse, Singapore Branch or its affiliates may, to the extent permitted by law, have used the information herein contained, or the research or analysis upon which it is based, before its publication.
Prices of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. There is an inherent risk that losses may be incurred rather than profits made because of buying and selling securities. Past performance is not a guarantee of future results. Investors should make their own appraisal of the risks and should consult to the extent necessary their own legal, financial, tax, accounting and other professional advisors, to ensure that any decision made is suitable with regards to their circumstances and financial position.
Neither this report nor any copy of it may be taken, transmitted, distributed directly or indirectly, into the United States of American, its territories or possessions or any U.S. person (within the meaning of Regulations under the U.S. Securities Act of 1933 as amended). Neither this report nor any copy of it may be taken or transmitted, distributed directly or indirectly into the U.K. Neither this report nor any copy of it may be taken or transmitted into Canada, or distributed or re-distributed in Canada or to any individuals outside Canada who is a resident of Canada. Neither this report nor any copy hereof should be distributed in Japan or to any resident thereof for the purpose of solicitation of subscription or offer for sale of any securities or in the context where the distribution here may be construed as such solicitation or offer. Any failure to comply with these restrictions may constitute a violation of United, Canadian, U.K. or Japanese securities laws.
The distribution of this report in other jurisdictions may be restricted by law and persons into whose possession this report comes should inform themselves about, and observe, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing instructions.
The material in this document is for information purposes only and is not an offer to sell or a solicitation to buy any securities. It was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, Credit Suisse does not represent that it is accurate or complete and it should not be relied upon as such. All opinions expressed and facts referred to herein are subject to change without notice. Credit Suisse assumes no fiduciary responsibility or liability for any consequences financial or otherwise arising from trading in securities if opinions and information in this document may be relied upon.
This report does not constitute a prospectus and is not intended to provide the sole basis for any evaluation of the securities discussed herein. All estimates and opinions included in this report constitute our judgement as of the date of the report and may be subject to change without notice. Credit Suisse, Singapore Branch or its affiliates may, to the extent permitted by law, have used the information herein contained, or the research or analysis upon which it is based, before its publication.
Prices of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. There is an inherent risk that losses may be incurred rather than profits made because of buying and selling securities. Past performance is not a guarantee of future results. Investors should make their own appraisal of the risks and should consult to the extent necessary their own legal, financial, tax, accounting and other professional advisors, to ensure that any decision made is suitable with regards to their circumstances and financial position.
Neither this report nor any copy of it may be taken, transmitted, distributed directly or indirectly, into the United States of American, its territories or possessions or any U.S. person (within the meaning of Regulations under the U.S. Securities Act of 1933 as amended). Neither this report nor any copy of it may be taken or transmitted, distributed directly or indirectly into the U.K. Neither this report nor any copy of it may be taken or transmitted into Canada, or distributed or re-distributed in Canada or to any individuals outside Canada who is a resident of Canada. Neither this report nor any copy hereof should be distributed in Japan or to any resident thereof for the purpose of solicitation of subscription or offer for sale of any securities or in the context where the distribution here may be construed as such solicitation or offer. Any failure to comply with these restrictions may constitute a violation of United, Canadian, U.K. or Japanese securities laws.
The distribution of this report in other jurisdictions may be restricted by law and persons into whose possession this report comes should inform themselves about, and observe, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing instructions.
Disclaimer »
The information comprised in this section is not, nor is it held out to be, a solicitation of any person to take any form of investment decision. The content of the AMEinfo.com Web site does not constitute advice or a recommendation by AME Info FZ LLC / 4C and should not be relied upon in making (or refraining from making) any decision relating to investments or any other matter. You should consult your own independent financial adviser and obtain professional advice before exercising any investment decisions or choices based on information featured in this AMEinfo.com Web site.
AME Info FZ LLC / 4C can not be held liable or responsible in any way for any opinions, suggestions, recommendations or comments made by any of the contributors to the various columns on the AMEinfo.com Web site nor do opinions of contributors necessarily reflect those of AME Info FZ LLC / 4C.
In no event shall AME Info FZ LLC / 4C be liable for any damages whatsoever, including, without limitation, direct, special, indirect, consequential, or incidental damages, or damages for lost profits, loss of revenue, or loss of use, arising out of or related to the AMEinfo.com Web site or the information contained in it, whether such damages arise in contract, negligence, tort, under statute, in equity, at law or otherwise.
