ABN Amro Holding NV analysts helped knock as much as US$766 million off the combined market value of Swissair Group and Railtrack Plc this week.
Railtrack slumped as much as 21 percent Tuesday, wiping US$662 million off the value of the shares, after Phil Oakley and Christian Cowley said the owner of the British rail network is worth 58 pence a share, an eighth of its closing price on Monday.
Swissair dropped as much as 10 percent on Friday, slicing US$104 million off its market capitalization, after analyst Damien Horth said shares of the Swiss airline are worth less than half their closing price yesterday.
The analysts have slashed share-price forecasts at a time when fund managers have become more critical of some investment banks' research departments for being too optimistic about the companies the researchers follow to win advisory business from their clients.
"It's unusual to put such forceful sell notes out, and this is creating good publicity for the transport team at ABN Amro," said Jim Stride, a managing director at AXA Investment Managers UK Ltd, which oversees ?50 billion (US$69 billion) in assets from London. ``The sheer ratio of buy notes to sell notes now indicates the value of research notes to investors in general has declined.'' AXA Investment Managers has built up an in-house research team of more than 20 company analysts over the past four years.
Before that, most of the research the asset-management company used was external. "It's essential for us to have our own view of what companies are worth," Stride said.
ABN Amro's transportation analysts are tougher on Railtrack and Swissair than many of their rivals. Oakley and Cowley are one of three analyst teams advising clients to "sell" Railtrack stock, while seven other analysts recommend that investors ``buy'' the shares and four rate the company "hold." Last month, Railtrack reported its first full-year loss since the British government sold the assets of British Rail to investors in 1996, and said it needed an extra ?2 billion (US$2.8 billion) from the government to fix the country's tracks.
Oakley and Cowley estimate there's a ?4.5 billion gap between the company's spending plan and the allowance it gets from regulators, causing the company to accumulate too much debt.
Railtrack shares rose 5.7 percent on Friday after credit agencies reaffirmed their ratings on the company.
Oakley, Cowley and Horth are part of a London-based team of transport research analysts at ABN Amro. It's ranked ninth of 10 bank-based research teams, according to fund managers surveyed this year by Reuters. The team is ranked second of 10 by companies surveyed, the Reuters report said.
ABN Amro's Horth is among five analysts who rate Swissair stock "sell." Eight analysts from other institutions advise clients to "buy" the shares, and another eight rate the stock "hold." Mario Corti, chief executive of Swissair, said earlier this week the carrier would cut an unspecified number of jobs and reduce spending to save about SF500 million (US$278 million).
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