STOCKHOLM (Thomson Financial) - Shares remained in negative territory in midday trade, slightly below morning levels as profit-taking continued in the wake of falls on Wall Street, with Tele2 however bucking the negative trend and moving higher on bullish broker comment, dealers said.
At 12.30 pm, the OMX Stockholm index was down 1.96 pct at 411.93 points, while the OMX Stockholm 30 index was down 1.97 pct at 1,255.85. Turnover amounted to 14.35 bln skr.
The main sub-indices moving at midday were materials, down 2.31 pct; retailing, 2.76 pct lower; and industrials, down 2.45 pct.
The major movers within these indices were Lundin Mining, down 4.25 pct at 84.50; Hennes & Mauritz B, 3.02 pct lower at 417, and Skanska B, down 3.12 pct at 155.50.
Tele2 B was up 0.84 pct at 119.50, after Morgan Stanley reiterated its 'Buy' recommendation and suggested a potential target price of 200 skr per share.
The broker said its 'bull case' suggests a target price of 152 skr. It said this scenario involves a 100 pct successful execution of selling all Mobile Virtual Network Operators (MVNO) for 550 eur per contract subscriber and 250 eur per prepaid subscriber.
'Further sources of value, not factored in our bull case, point to 200 skr (70 pct upside),' said the Morgan Stanley, adding these include 'Russia re-rating; fixed to mobile substitution boosting growth at Comviq; running the fixed telephony resale operations for cash; and successful execution in direct access broadband.'
Volvo B was down 3.04 pct at 143.50, and Scania B down 2.93 pct at 165.50. There was speculation yesterday in Le Monde that the French state would sell its stake in Renault back to the company, which would probably trigger a sale of Renault's Volvo stake, dealers said.
JP Morgan has downgraded Volvo to 'underweight' from 'neutral' on valuation grounds, saying it now looks expensive. As for Scania, JP Morgan maintained its 'neutral' rating with a 157 skr target to reflect the recent share split.
The comments came in a truck sector review in which it lifted its price target on Volvo to 125 skr.
The broker said Eastern Europe should remain a key driver of growth for Western European truck makers and calculates the region's solid economic outlook, higher infrastructure investments, trade and hence transport demand to lead to growth of around 20 pct in the Eastern European truck market in 2007. It sees growth in 2008 of around 18 pct.
JP Morgan said Scania and MAN are likely to be the main beneficiaries of this trend, given their high relative exposure to the region.
Although Volvo already has the highest market share in Eastern Europe, its exposure to the region is one of the lowest relative to the company's size, the broker said. TF.TFN-EuropeStockholm@thomson.com hc/jlw COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
© 2007 AFX News
