UBS maintains Reduce 2 rating for Solvay

15 February 2007 14:53  [Source: ICIS news]

(Adds information on share prices in the first and last paragraph.)

 

MUMBAI (ICIS news)--UBS on Thursday maintained its Reduce 2 rating on Solvay with a price target of €108.00 ($141.76) after the company missed the analyst bank’s fourth quarter 2006 recurring operating profit (REBIT) estimate, which led to a 5% drop in share prices.

 

Solvay reported a fourth quarter REBIT of €2.3bn, almost 18.5% below UBS’ expectations, while the company's pharmaceuticals REBIT was €83m, €40m below previous forecasts, UBS said in a note to clients.

 

The pharmaceuticals division’s REBIT weakness was attributed to €35m in inventory management costs in the US, €10m in higher R&D (research and development) costs and the expected expiration of Pantoloc.

 

“Solvay had a 'favourable' start to the year in the cyclical businesses, but in our view the case for a further leg up in re-rating due to improving pharma has experienced a setback today. Solvay trades at a 10% premium to the Eurochem diversifieds, but lacks catalysts in our view,” UBS said.

 

The company's share price had dropped by 5.17% by 15:38 GMT to €115.50.

 

($1 = €0.76)

By: Staff Reporter
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