Intesa Sanpaolo SpA shares were the biggest gainers in the euro zone Friday as investors shrugged off the bank’s heavy net loss for the fourth quarter, with analysts saying the dividend plan was probably providing support.
Italy’s No. 2 bank by assets said it aims to reach an annual net profit of €4.5 billion in 2017 and also set out plans to move toward a more fee-based business model in preparation for a potentially prolonged period of low interest rates.
“While we are sceptical on some of the growth targets of Intesa’s plan, the promise of 28% cash dividend yield may support the shares, in our view,” said Berenberg Bank in a note to clients.
Alongside the strategic plan for 2014-17, the Italian bank also reported a net loss of €5.19 billion ($7.13 billion) for the fourth quarter, compared with a net loss of €83 million a year earlier. Analysts had forecast a net loss of €35 million.
Intesa shares rose 3.1%, topping the Euro Stoxx 50 index, Europe’s leading blue-chip index for the euro zone.
Conversely, Danone SABN.FR +0.46% shares led the Euro Stoxx 50 index lower, trading down 1.7% after BarclaysBARC.LN +0.06% cut its recommendation on the stock to “underweight” from “equalweight”.
Analysts noted that global dairy input prices have rallied relentlessly in recent months and, as such, are of the view that France’s Danone–a maker of yoghurt and other food products–will face increasing pressure from input costs; something that could continue to drive consensus earnings downgrades.
“This decreases Danone’s relative earnings surety, which is already poor, particularly around a recovery in Chinese infant formula,” said Barclays. “With persistently negative earnings momentum, we believe Danone deserves to trade at a low-single digit discount to peers.”
Shares in DiageoDGE.LN +0.24% PLC rose 0.4% after the drinks giant announced a shake-up of senior management, detailing three changes to the company’s executive team. The changes have been made with an aim at boosting its business in emerging markets including India, China and Australia.
Brewers and drinks makers have had a torrid time in emerging markets recently, hit by worries about slowing growth and the effects of currency weakness.
Diageo is due to report its third-quarter trading statement on Thursday, 17 April.
Source: WSJ