Deutsche Telekom (NYSE:DT - news) was in demand yesterday following news that René Obermann, head of the group's mobile phone operations, had succeeded Kai-Uwe Ricke as chief executive.
The announcement sparked talk of asset disposals and further cost-cutting measures at the company.
Morgan Stanley raised its price target for DT from EU13.10 to EU13.50 and kept its "overweight" rating on the stock. "Cost reductions, including personnel and non personnel, together with value realisation through real estate, could take the stock to our blue-sky scenario of EU17 per share," the investment bank said.
But other analysts were more sceptical. Bear Stearns noted that the Verdi labour union was reported to have been the driving force behind the management change as it was unhappy at the number of redundancies already proposed by the company.
"The union controls 10 of the 21 seats on DT's supervisory board, and so Mr Obermann is unlikely to materially increase headcount reductions," commented analyst Jonathan Dann.
Reiterating an "underperform" recommendation, Mr Dann also had doubts about the possible sale of some of DT's mobile assets. "Given Mr Obermann's background in T-Mobile, he has strong ties to its US operations and, in our view, a sale of this business is highly unlikely," he said.
DT shares rose 2.6 per cent to EU13.48, having earlier touched EU13.62.
In the wider market, a batch of positive earnings announcements managed to outweigh sharp falls for mining stocks and the FTSE Eurofirst 300 index settled at 1,466.64, up 0.2 per cent.
Lehman Brothers said yesterday that the European earnings season had been healthy so far, with the number of companies surprising positively - beating expectations by 3 per cent or more - outnumbering those surprising negatively by 2.5 to one.
"This is the same level as last quarter's and only slightly below the level of 2.9 to 1 at the end of the same quarter last year," said research analyst Shanthi Nair.
"We are bullish on continental European equities and a belief in the continued improvement in corporate profitability has been one of the main factors underlying our 'overweight' call."
Alstom jumped 8.5 per cent to EU82.15 after the industrial group reported a 27 per cent rise in first-half operating profits and increased its outlook for the full year.
Sacyr Vallehermoso, the Spanish construction group, extended last week's strong advance by a whopping 15.2 per cent to EU54 after it reported an increase in nine-month core earnings.
The company also confirmed it was aiming to acquire a 20 per cent stake in Repsol YPF (NYSE:REP - news)but gave no fresh details on the current size of its holding in the energy group. Repsol shares ended unchanged at EU27.80, outperforming a 0.7 per cent fall in the oil and gas sector as a whole.
Meanwhile, German construction group Bilfinger Berger exceeded expectations with its nine-month figures and its shares rose 1.7 per cent to EU48.40.
WestLB upped its target price for the stock from EU48 to EU51. "Very good results, which once again have been driven by the services division," said analyst Ralf D?rper.
The list of fallers in the FTSE Eurofirst 300 was dominated by UK-listed mining stocks as the sector was undermined by steep falls in base metals prices.
Novartis closed 1 per cent lower at SFr72.95 on news that a US decision on approving the company's Galvus diabetes drug had been delayed by three months.
Novartis asked the Food and Drug Administration to consider new clinical trials data which offer evidence that skin problems identified in a preclinical animal study had not been seen in clinical studies with diabetic patients.
Julien Dormois, analyst at Bryan Garnier, said the submission of the data was positive for Novartis and reiterated his "buy" recommendation on the stock with a target price of SFr82.
