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Good morning,

Markets are called to open flat this morning in Europe. This is what's happening today:

  • Japan’s Topix Index poised to snap the longest weekly winning streak in 40 years, as profit reports disappointed investors;
  • Draghi speaks in Moscow;
  • U.K. retail sales may have risen, a survey shows;
  • Spain Jan. consumer prices decline almost 2% from Dec., according to economists.
  • Peugeot Citroen downgraded by S&P; banking unit cut to junk

Companies reporting results in Europe today: Anglo American, PPR, Eni, Commerzbank, Banque Catonale Vaudoise, Sulzer, Aker Solutions, Aegon, Ratos, Investment Kinnevik, Severn Trent, Hennes & Mauritz

Three interesting companies to talk about today which are going to report results today: PPR, Eni and Commerzbank.

Barclays on PPR (Price Target E185) – PPR remains one of our preferred picks in the luxury sector and we have increased our price target to €185, reflecting the re-ratings across the peer group in our sumof-the-parts valuation. We expect strong FY12 results when the company reports on 15th February and see the luxury division posting 10% organic growth in Q4 (the only company producing a better figure has been Ferragamo) and some recovery at Puma to reach 7.8% group organic growth. We have downgraded 2013 EPS by 3% but this only reflects the strong Euro and weak yen. The stock has re-rated along with the sector. However, taking into account our valuations for the remainder of Redcats, Fnac and Puma (€200 per share – a discount to the current share price) implies that the luxury business trades at 16.7x 2013E PE a discount to the sector on 19x and soft luxury on 20.3x. We reiterate our OW rating.'

Barclays on Eni (Price Target E22) – Eni was instrumental in changing the management at 42.9% owned Saipem, but we believe even they will be surprised by the extent of the cuts to guidance unveiled by Saipem yesterday. Details of the analysis by our services team can be found in The fall of the King. Given Eni's stake, a straight read-across from the reduced guidance would result in a 4% cut to 2013 earnings, and 3% for 2014 based on our new estimates for Saipem. This should not impact momentum in the upstream, but it would imply limited earnings growth in 2013. The impact on NAV is, however, significantly lower. We currently carry Saipem at EUR1.8/share within our EUR22 valuation, based on a Saipem share price of EUR32. As a result, a EUR10/share move in Saipem's share price moves our Eni NAV by EUR0.4/sh, or approximately 2%. We think Eni’s shares are likely to be weak on the Saipem news, but we continue to believe in the medium and long-term upstream positioning of the company, which combined with the commencement of a buy-back programme and the completion of the Snam and Galp sales in 2013, should be enough support for further outperformance following any initial share price reaction.

Barclays on Commerzbank (Price Target E1.20) – Capital projections appear weaker than previously thought, and are deteriorating with earnings downgrades and loss risks. New financial targets are subdued too, just 7-8% for the group, even by 2016. Retail banking and capital markets are the main problem areas, with RoE targets below costs of equity, and consensus expecting lower still. We recently updated estimates and price target, and make no further changes here. We reiterate our Underweight view on Commerzbank shares.

For further information on these three stocks or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli