City Talk: Zeneca awaits the right prescription

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The Independent Online
Tomorrow will give analysts the chance to catch up on developments at Zeneca, the pharmaceuticals group, when it gives its first R&D presentation in two years. The shares have been caught out by a couple of pessimistic brokers' notes in the past few weeks, and the price has slipped considerably, down from pounds 22.65 in July, to as low as pounds 17 a week ago. The price has since recovered to pounds 19. Doubtless there will be enough good news emerging from Cheshire to see the bulls even happier.

It is interesting to spot the buy notes coming out of brokers' offices, despite the upheavals of the last few weeks. Cynics might argue that the very fact that analysts continue to produce buy notes with such obvious abandon, only goes to show how little weight one should attach to them in the first place. That may be so, but then again, there is one overriding reason why, whatever feelings of outrage their seeming tunnel vision may provoke, that they have a point.

What, after all, has happened after every previous stock market crash? Share prices have risen. It would be a maverick personality who decided that this time round it will be any different.

However, it is certainly a brave man who would tip Standard Chartered at present. That is what Charterhouse Tilney Securities' Simon Willis and Karl Green have done. Allowing for the turbulence still to come, they reckon the stock is cheap against the sector, and the market. The quality of the bank's management and systems, and their fleet-footedness, "should ensure that earnings growth will be comfortably in excess of 10 per cent over the next five years". The two have downgraded their forecasts for the next two years, by 5 per cent and 7 per cent, but they also see the bank winning business through currency devaluations, leading to growth in exports, and thus more trade finance business. Standard Chartered has also picked up windfall profits, apparently, on the turbulence in exotic currencies.

The point on quality of management could be questioned, given some of the debacles the group has been exposed to in recent years. The view that Standard Chartered is a buy is certainly daring, but on reflection, a contrary one, which could well merit closer attention.

On the whole, Marchpole, the clothes maker and designer in the throes of coming to the market, has had a positive reception. The firm, which chiefly relies on its licence agreements with Yves Saint Laurent, is raising pounds 20m in new capital, and the shares are due to be priced on 8 December. The current range is 120p to 150p.

One area overlooked, however, is the licence the company has obtained for Japan, with Fukusuke. The department store group will take YSL clothes from Marchpole. It has the potential to expand Marchpole's market.

The changes sweeping through markets have made their impact on the drinks industry, according to a new report out from Whitbread, its 1997 On-Trade Market Report. The scale of change is clear, and Whitbread says licensees will have to adopt the same approach as supermarkets. This means a regular review of their beer ranges, three times a year, rather than once a year. While there seems to be constant change in some areas - the range of drinks popular with the young, for example - leading to the emergence of the so-called repertoire drinker. These people have three favourite drinks, and expect the pubs they go to to stock all three brands. If they don't, their custom is unlikely to be retained for long.

RICHARD PHILLIPS

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