Jefferies Ups Air Liquide to Buy

Jefferies issued a report on chemical sector where it has upgrade Air Liquide and Air Products to Buy. Here’s the summary of the report:

« The industrial gases are positioned for a classic late-cycle trade: improving industrial demand and a turn in the capex cycle as a catalyst for a better relative valuation multiple, industry consolidation and a strong cash « harvest cycle » creating more balance sheet flexibility, more discipline after a « bad vintage » of contracts, and classic defensive characteristics. We upgrade Air Liquide (29% potential total return) and Air Products (17%) to Buy. »

Valuation Triggers Downgrade from UBS on Allied Irish Banks

Per today’s report:

« Higher EPS and capital forecasts but a valuation more than up with events Allied Irish Banks‘s 3Q17 trading update confirmed a further expansion in interest margins – up 8bps QOQ to 2.56% – and 100bps QoQ increase in CET1 ratio to 17.6%. Reiterated cost and impairment guidance sees our 2017-2019 adj. EPS estimates increase by 2-6%. We expect trading to get more difficult as loan writebacks end, underlining the importance of excess capital returns to share performance. We think that AIB’s excess capital is more than reflected in the price. We have AIB trading at 16.3x 2019E EPS, double the Bank of Ireland equivalent P/E or 14.6x excluding excess capital, a 50% premium to the Eurozone bank average. We downgrade to Sell from Neutral.

SocGen Ups Eurazeo to Hold from Sell

Per today’s report:

« In our view, the purchase of a stake in Rhône justifies a lower NAV discount given the development of third-party asset management. The possible takeover of Idinvest could further substantially bolster the share of third-party asset management in Eurazeo’s business. We therefore upgrade to Hold from Sell. Our new TP implies a 12m TSR of 3%.

Goldman Ups Leonard Finmeccanica to Buy

Per today’s report:

« Leonardo shares have fallen 30% since its 3Q profit warning, reflecting the implied cut to 2017E consensus EPS. However, looking further out we expect certain elements of the warning to reverse. This leaves Leonardo as one of the least expensive stocks in European A&D, offering a 16% FCF yield by 2020E. We upgrade the shares to Buy from Neutral. »

Goldman Ups L’Oreal to Buy

L’Oreal just received some help from Goldman’s Fulvio Cazzol, Millie Pierce, John Ennis and Natasha de la Grense. Per today’s report:

« We believe the L’Oreal share price fails to reflect its superior long-term growth prospects relative to other consumer staples bellwethers. On our analysis of self-help, L’Oreal screens as a “GAMA” (growth compounder with margin opportunity from self help) stock, offering superior organic growth as well as long-term margin upside. We believe near-term concerns over slowing growth in Luxury could prove overdone, as higher investment at a time when most competitors are cutting, could pave the way to further
share gains; we forecast organic revenue growth of 4.8% in 2018.
With FY18 Reuters consensus earnings growth at an undemanding +5.4%, and a balance sheet offering significant optionality (we forecast €1.6bn in net cash in FY17E), we see a good buying opportunity. We upgrade L’Oreal to Buy (from Neutral) with a 12M price target of €210 (from €195), offering 11% upside. »