EUR 100.00 For Business Accounts Only

IBERIAN DAILY 03 OCTOBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: LAR ESPAÑA, OHLA, ROVI.

Awaiting news from the Middle East
European stock markets ended flat, as the depreciation of the euro contributed to offset the increasing premium for geopolitical risk. Thus, in the STOXX 600, Energy continued to be the best-performing sector (thanks to the rally of Brent crude), followed by Technology, whereas Utilities and Travel&Leisure ended with the biggest drops. On the macro side, in the euro zone, the 2Q’24 unemployment rate remained stable at 6.4%. In Brazil, August’s industrial output moderated slightly more than expected. In the US, September’s (ADP) private employment survey beat expectations, hinting at a slightly more dynamic job market than in the previous readings. In the UK, the BoE governor warned that more aggressive cuts could start if the good inflation news continues. The OPEC+ meeting decided to maintain the original plan of increasing output starting in December, urging those countries with excess production to cut their output. In Mexico, the manufacturing PMI fell again in September to 47.3 from 48.5 previously. In Japan, the PM S. Ishida was quite dovish in his speech yesterday where he insisted on maintaining the coordination of the fiscal and monetary policies, suggesting it is not the time to raise interest rates to the BoJ governor K, Ueda,.
What we expect for today
Stock markets would open with corrections of as much as -0.5%. Currently, S&P futures are down -0.12% (the S&P 500 ended unchanged vs. the European closing bell). Asian markets are climbing (China’s CSI closed and Japan’s Nikkei +2.03%).
Today in the euro zone we will learn September’s final services PMI and in the US weekly jobless claims, August’s factory orders and September’s non-manufacturing ISM.


COMPANY NEWS

ROVI. An attractive entry point. We change our recommendation to OVERWEIGHT.
The stock has fallen -22% since May highs (-25% vs. IBEX) due to the estimates cut in Moderna and the reduction to the amount of candidates to acquire the company’s CDMO division. Our estimates for CDMO are already conservative (both in numbers and valuation), and at the current level we see an attractive entry point. We raise our T.P. +8% to € 90.00/sh. (+26% upside) after rolling over the model and incorporating the CDMO division independently (€ 2.97 Bn; 11.5x EV/EBITDA) in view of the possible sale. If the deal is carried out successfully, we do not rule out the payment of an extraordinary dividend, although we think the priority will be growth and diversification of its own business. We change our recommendation to OVERWEIGHT.

LAR ESPAÑA. Helios improves its offer by +2.5%. We change our recommendation to ACCEPT THE BID.
Yesterday Helios announced an agreement with the main shareholder in LRE (Vukile, 28.8%) whereby the latter pledges to sell its stake to Helios in exchange for an improvement to the TOB price, which is now € 8.30/sh. (+2.5% vs. the previous € 8.10, +1.8% vs. yesterday’s closing price). Following the agreement, we understand that Helios has the deal all but sealed, as it would have ~50% of voting rights in LRE (to Vukile’s stake we would have to add the 10% held by Grupo Lar and 10% by Brandes). Thus, we do not think there will be a counterbid or an additional improvement, and thus we change our recommendation from OVERWEIGHT to ACCEPT THE BID, with a T.P. of € 8.30/sh. (vs. the previous € 8.90/sh.).