Cap Gemini’s shares increased 2.37% in Paris trade Friday after Exane BNP Paribas upgraded the IT group from ‘neutral’ to ‘outperform’, citing the company’s strong growth prospects based on its business mix, cost control and use of off-shoring.
Exane's analysts also hiked their target price for the French company to 64 euros ($85) from 55 euros, noting that the company trades at a 14% discount to the sector in terms of estimated 2008 EV/EBITA ratio.
The analysts said they expect Cap Gemini to enjoy 'sector-leading revenue growth and strong margin expansion', and raised their 2008 forecasts for earnings per share -- up 6% to 3.3 euros -- and operating margin -- 8.5% versus 8% previously.
The stock was the biggest gainer on the CAC-40 Index.
Also active in European trading:
Commerzbank (up 3.08%) Shares rose after Citigroup announced that it is looking to acquire a bank in Germany.
Kingfisher (up 2.50%) Europe’s biggest home improvements retailer led the FTSE-100 Index gainers on media reports that the private equity arm of Goldman Sachs is sizing up a bid. Deutsche Bank also raised Kingfisher’s target price to 235 pence from 215 pence, thereby maintaining its sell rating.
Resolution (down 5.17%) The British firm just ended over four months of takeover talks with unnamed parties, sending its shares down even though the insurer said it intends to look at acquisitions and ventures.
Vodafone (down 3.32%) Vodafone Group revealed lower-than-expected margins at its U.K. operations on Friday and warned competitive and regulatory pressures afflicting its core European businesses would continue throughout the year.
Woolworths (down 3.13%) The British retailer’s shares fell after Credit Suisse downgraded it to underperform from neutral and cut its target price from 35 pence to 27 pence based on the premise that there’s too much risk given the limited sales visibility.
Eurotunnel (down 2.38%) Shares Eurotunnel declined after the Daily Telegraph reported that the company is facing a class-action lawsuit from some of the founding shareholders after the cross-Channel operator axed their travel perks as part of its financial restructuring.