Europe Markets: European earnings roll call sees Nestlé shares rise, while ASML, Akzo Nobel fall

European stocks struggled for direction on Wednesday as investors reacted to results from some of the region’s biggest companies, with shares of Nestlé a top gainer, while ASML Holding, Akzo Nobel and Antofagasta all fell.

Struggling for direction, the Stoxx Europe 600 index

was flat at 468.91, after a 0.3% gain on Tuesday. The German DAX

rose 0.1%, while the French CAC

and FTSE 100

were unchanged.

Global concerns on rising inflation were in focus, with Germany reporting a 14.2% surge in annual producer prices for September, the highest annual gain since October 1974, said statistics office Destatis.

Among companies, Nestlé

was a leading gainer with a rise of over 3% as the Swiss food and drink conglomerate reported higher sales for the first nine months of the year that also beat forecasts. And Nestlé lifted its full-year guidance for organic sales growth. Its Nescafe, Nespresso and Starbucks brands. Purina PetCare and vegetarian and plant-based food all drove growth.

“Nestlé appears well-positioned to weather the current environment
of rising input costs,” said a team of analysts at Morgan Stanley led by Pinar Ergun in a note to clients. The company’s valuation of 22 times 2022 earnings, excluding its L’Oréal holding, “looks undemanding to us,” said the analyst.

Another gainer was Deliveroo
with shares of the delivery service also rising above 3% after reporting a rise in third quarter orders and gross transaction value and lifting guidance on the latter for the year.

On the downside, shares of ASML Holding


slipped over 1% even after the Dutch chip equipment maker reported a 64% gain in third-quarter net profit that beat forecasts. Amid a continuing industry chip shortage, ASML said it would need to boost capacity to meet demand for memory and logic modes.

Akzo Nobel

shares fell over 1% after the Dutch paints and coating company reported a third-quarter fall in net profi, missing consensus and said its performance was hit by high raw-material costs and supply-chain disruptions.

“Despite the well flagged near-term raw mat headwinds, the underlying demand across the division remains strong and AKZO continues to benefit from the strong coatings demand as many of the end-markets move toward normalization, said a team of Citi analysts led by Mubasher Chaudhry, in a note to clients.

“Sustainability of volume and measures to combat impacts of raw material headwinds into 2022 should be a key debate point going forwards; however, shareholder returns and significant balance sheet firepower support our positive stance on the name, said Chaudhry, who has a buy rating on the Akzo Nobel.

The mining sector was among the weakest in Europe, with shares of Antofagasta

dropping over 3% after the mining group reported weak copper production for the third quarter and forecast lower output for next year, due to drought conditions in Chile. 

Stock in Kering

fell over 3% after the French luxury goods group reported late Tuesday third-quarter revenue above expectations, but a miss at its flagship Gucci label. Equita analyst Paola Carboni said in a note that any negative share reaction was “an opportunity in view of the acceleration from the fourth quarter” and considering such factors as momentum of other brands, and discounted valuation.

This post was originally published on Market Watch

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