Deutsche analysts shift European list, remove Lufthansa, add Pernod Ricard

By Ronda Fears

Nashville, Tenn., Feb. 19 - Deutsche Banks' European convertible analysts removed Lufthansa's 1.25% euro convertible due 2012 from their recommended list after a strong directional move and added the Pernod Ricard 2.5% euro convertible due 2008, noting strong organic growth and an optimistic outlook on Seagram's integration underpins an attractive directional opportunity.

Michael O'Connor, Deutsche Bank head of research, and convertible analysts Frank Kennedy and Clodagh Muldoon noted in a recent report that the Lufthansa security was removed from their buy list as the issue gained 3.34% from 105.125 on Feb. 8 to 106.3125 on Monday.

Pernod Ricard was added, with the analysts noting that Pernod delivered the highest level of organic sales growth in the spirits sector for 2001.

"This should help provide investors with some reassurance on the strength of the core business ahead of the Seagram integration. It also illustrates the group's ability to successfully manage a broad portfolio of brands with mixed potential," the analysts said in the report.

"The rating still fails to reflect the changes that have taken place at the group or the prospect of above average growth for the next 3 years. The bonds represent an attractive balanced play with an undemanding valuation into an attractive directional call on the stock."

Among other buy ideas they suggest are the Legal & General 2.75% convertible due 2006 (AA), Elior 1% euro convertible due 2007, Thales 2.5% euro convertible due 2007, Vinci 1% euro convertible due 2007, Sol Melia 1% euro convertible due 2004, MTG 5.5% euro convertible due 2006, Wolters Kluwer 1% euro convertible due 2006 and UBM 2.375% convertible due 2006.

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