20 February 2007 09:44 [Source: ICIS news]
LONDON (ICIS news)--UBS on Tuesday cut its target share price for Akzo Nobel by €1 ($1.3) to €56 mainly due to higher research and development (R&D) costs in Organon.
“Following the company’s guidance, we have increased our Organon R&D by €60m for 2007 and beyond,” the analysts said in a note to clients, adding that the R&D costs in the fourth quarter had been €15m higher than expected.
“According to the company, a number of products are moving to late stage in clinical trials and although asenapine trials have come to an end, R&D expense will remain high.”
Akzo Nobel reported fourth quarter operating profits (pre-exc) of €249m, down 16% year-on-year, significantly lower than UBS expectations of €296m and consensus at €301m.
However, adjusting for one-offs, Q4 operating profits were up 27% with Organon’s organic growth of 5% ahead of UBS forecasts.
The analysts maintained the company’s Buy 2 rating, saying Akzo Nobel’s underlying business was still healthy.
The Dutch chemicals and pharmaceuticals group said its initial public offering (IPO) for the Organon business was scheduled to be completed by the end of March.
The company’s share price was at €46.41 at 09:06 GMT, up 0.37% from the previous close.
($1 = €0.76)
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