UBS ups ICI price target on Quest disposal

05 January 2007 08:49  [Source: ICIS news]

LONDON (ICIS news)--UBS on Friday raised its target share price for UK coatings firm ICI by 58 pence to 470p on the back of the recent disposal of Quest and a positive outlook for National Starch.

 

The bank’s analysts said in a note to clients that their earnings per share (EPS) estimates for 2006 and 2007 had remained largely unchanged but that they had raised forecasts for 2008 by 4.8%.

 

“Following the announcement of the Quest disposal, we have adjusted our forecasts to reflect the divestment,” they said.

 

“We have also taken the opportunity to revisit our earnings estimates for the other divisions and slightly increased our National Starch estimates.”

 

They added that the raised estimates also reflected the company’s reduced pension deficit following ICI’s intention to inject £230m ($446m/€341m) into the pension fund.

 

Commenting on media reports that Dutch pharmaceuticals and chemicals firm Akzo Nobel may be interested in buying ICI, the UBS analysts said that strategically the former could strengthen its decorative coatings positioning in Asia and Europe and gain a foothold in the US.

 

“We estimate that following the announced divestment of Pharma, Akzo Nobel would have the necessary financial resources,” they said.

 

But, they added, the financial case would be marginal.

 

“Based on our analysis, we estimate that synergies from such a deal would be limited to €150m-170m coming from some overlaps in Europe, purchasing and from site rationalisation.”

 

($1 = £0.52/€1 = £0.67)

By: Hilde Ovrebekk
+44 20 8652 3214

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