Paris, Dec. 15 (Bloomberg) -- PSA Peugeot Citroen SA shares rose as
much as 8.6 percent to a record, after analysts at SG Securities and
Goldman, Sachs & Co. made positive comments on France's biggest
carmaker.
PSA gained as much as 17.6 euros, or 8.6 percent, to 223, its first
record since it reached 219.37 on June 25, 1998. SG maintained its
``buy'' rating on the shares and fixed a price target of 220 euros.
Goldman added PSA to its European Model Portfolio, removing its French
rival Renault SA.
A report yesterday showed PSA's sales in Western Europe soared 12.4
percent to 145,350 vehicles in November, though overall car sales were
little changed, on strong sales of its new 206 model and HDi engines.
Profit will be buoyed in coming months by strong sales of all PSA's
models, SG said.
``The group's main problem now is delivery capacity because demand is
strong across the range -- better than expected on the 106, Saxo and
306,'' said SG analyst Philippe Barrier in a note to investors.
Barrier raised his 1999 earnings-per-share estimate to 18.6 euros, from
17.7, and his 2000 EPS estimate to 21.3, from 20.1.
Investors are turning to industrial stocks such as Peugeot as a pick-up
in economic growth across Europe increases consumer demand for cars.
Europe's automotive industry is headed toward another record year, with
gains in France, Greece and Spain more than offsetting drops in Germany
and the U.K. France is Peugeot's biggest market.
PSA, Europe's No. 3 carmaker, said on Sept. 8 that first-half profit
rose a greater-than-expected 60 percent, boosted by cost cutting. The
company expects to save 800 million euros this year by merging
production of its Peugeot and Citroen brands.
``Peugeot is now our autos teams top pick in Europe,'' said Keith
Hayes, an analyst at Goldman, Sachs. It is ``one of the few companies
where restructuring benefits could still produce an earnings surprise.''
The company will begin selling the Citroen Xsara Picasso this month. On
Dec. 1, Citroen indicated that it expects strong sales of the compact
people carrier and has lready received 30,000 orders from its
distributors.
``The Picasso, with projected sales of 170,000 units, looks good,''
Barrier said. The car, built in Spain, should quickly become profitable
as the production cost is ``moderate,'' he said.
Peugeot's stock has been the world's best performer among auto shares
in 1999, gaining 65 percent.