It is trading on 1.3 times the value of its net assets, compared with an average of 1.7. It suffered the biggest loss by an insurer from the attacks on the World Trade Centre, pushing it to a total £114m loss for 2001, and has since lagged the stock market recovery by rivals.The turnaround will come through this year, with analysts expecting £6.7m in pre-tax profits for 2002, shooting up to £70m for 2003. Brit is in The Independent’s annual share portfolio for the second time in a row this year, and with growth prospects for premiums still on the up, we are still recommending it as a buy at 82.5p. CAT’s still a gamble while it waits to get the cream It is not clear that CAT has got the cream of the British biotech sector in its all-share acquisition of Oxford GlycoSciences, but it has certainly bought OGS’s £130m cash pile on the cheap. The value of Cambridge Antibody Technology’s offer is now £91m.CAT has a history of this sort of cash-focused deal-doing, having last year tried to buy an investment company that owned a portfolio of drug royalties. It’s all very clever, what CAT needs as much as cash is products.
There simply aren’t enough in the pipeline – even with OGS’s Zavesca and its own rheumatoid arthritis drug Humira to be launched by Abbott this year – to get CAT through to profitability in five years time. It is a competitive market for drug in-licensing at the moment, so it could prove a struggle.That said, the company is rich beyond the dreams of its rivals, and its antibody technology is highly regarded. Most analysts believe the potential value of the drug it does have so far would justify a much higher share price, if only investors fancied taking on the considerable risks. That won’t happen until there is a much more widespread return of confidence in the stock market. Down 7.75p at 460.25, the shares may revive when Humira is approved for launch, but it is for gamblers only..
jeremy.warner independent.co.uk
According to Sir Peter Middleton, chairman of Barclays, the banking system is sinking under an ever growing mountain of regulation, from the seemingly endless stream of government reviews and new accounting rules, to the capital requirements of Basel II, the corporate governance obligations of Sarbanes-Oxley, and the price controls imposed by the Competition Commission. There will be plenty more of the same ilk arriving shortly from Europe, he predicts.
It’s all very worrying, claims Sir Peter, inhibiting as it does sensible risk taking, and making it increasingly difficult to explain the business in simple terms to customers, employees and shareholders. I’m sure Sir Peter is right about all this, but the truth of the matter is that it doesn’t seem to have interfered with Barclays’ ability to function and make oodles of profit one jot Rather the reverse in fact. All five of Britain’s big high street banks have thus far survived one of the most vicious business downturns in living memory with only very minor damage to bottom line profits. In past cycles, Barclays and others would by this stage be crying out in pain and one or two of them would undoubtedly have been loss making.