Europe’s equity analysts race to provide valuable insights while keeping an eye on another bottom line: their own. • Contributing Editor Ben Mattlin wrote the [following] sector reports.

BEVERAGES Nicholas Bevan, Graeme Eadie Deutsche SECOND TEAM Alexandra Oldroyd & team Morgan Stanley ■ THIRD TEAM Ian Shackleton & team Lehman ■ RUNNERS-UP Matthew Jordan & team DKW; Michael Gibbs & team Goldman Sachs; Melissa Earlam, Christopher Pitcher & team

UBS Deutsche’s five-time first-teamers, Nicholas Bevan, 34, and Graeme Eadie, 45, “almost always make us money,” says a devoted client. Last year was no exception. Citing sustainable price increases, strong volume growth and healthy margins, London-based Bevan and Paris-based Eadie maintained their June 2004 buy, at E2.45, on Irish beverage maker C&C Group; in 2005 the stock was up 79.3 percent, compared with an 18.1 percent advance for the sector. Other examples of money-making calls: Noting greater thirst for the products of South Africa’s SABMiller in developing countries, the pair upgraded the shares to a buy, at an adjusted 682.00p, in May. In July the company agreed to acquire control of Colombian brewer Bavaria for $7.8 billion; by year-end, SABMiller’s shares had bubbled up to 1,061.00p. Investors praise the two-person Morgan Stanley team headed by Alexandra Oldroyd, which repeats at No. 2, for its longstanding endorsements of U.K. distiller Allied Domecq, labeled as a bargain, at 367.00p, in October 2003, and French rival Pernod-Ricard, which was termed undervalued, at E105.00, in October 2004. In April, Pernod bid for Allied, and although Morgan Stanley’s involvement restricted coverage, clients credit Oldroyd with being “the only one not telling us to take profits in the first quarter,” as one says. Allied ended its final trading day in July at 694.00p; Pernod, which the duo re-recommended on merger synergies in August, at E138.80, closed the year at E147.40. Rising to third place from runner-up, Ian Shackleton’s Lehman trio earns buy-siders’ praise for coverage of Latin America, particularly the Brazilian operations of Belgian brewer InBev, the result of a September 2004 merger between Interbrew and Co. de Bebidas das Américas. “They kept saying the acquisition was underappreciated, and they were right,” says a grateful customer. Rated an overweight since October 2004, at E27.25, InBev rose to E36.77 at year-end 2005. 

BIOTECHNOLOGY Samuel Williams Lehman SECOND TEAM Martin Wales & team UBS ■ THIRD TEAM Erica Whittaker & team Merrill Lynch ■ RUNNER-UP Ravi Mehrotra & team Credit Suisse 

Samuel Williams, the 36-year-old Lehman analyst who tops the sector for a third consecutive year, “keeps up with every little bit of information,” says an investor. Another cites his April 2004 upgrade to overweight, at 469.50p, of U.K. biopharmaceuticals company Cambridge Antibody Technology Group. Williams thought company lawyers would prevail against U.S. drug giant Abbott Laboratories over royalties on Humira, a popular rheumatoid arthritis medicine. An October 2005 settlement almost doubled Cambridge’s share of future royalties, and its stock leapt to 698.50p at year-end. In March, Williams downgraded Epigenomics, a German maker of diagnostic oncology products, to equal weight, at E7.70, on concerns about its widely used colon-cancer test. Market anxiety drove the shares to E6.45 at year-end. “Sam has an uncanny ability to uncover what’s going to happen,” declares a supporter. Buy-siders elevate Martin Wales’s UBS trio from runner-up to second place for what one called their research “breadth and depth.” In April, Wales upgraded Switzerland’s Actelion to buy, at Sf123.00, on its pipeline of promising molecular therapies. After rising to Sf144 in early fall, Actelion shares plunged in late November, following news that a competitor’s drug performed unexpectedly well in clinical trials. A few weeks before Actelion shares closed the year at Sf108.70, Wales downgraded the stock to neutral, at Sf112.00, but investors didn’t seem to mind the lag. As one explains, “It’s their thorough understanding of the latest developments, not stock timing, that I look to them for.” Merrill’s duo, led by Erica Whittaker, advances a step to third. Dubbed “devastatingly smart” by one customer, Whittaker wins praise for her March 2004 nod to Genmab, a Danish antibody developer, at 80.00 Danish kroner, on the expectation of good clinical data from several new products. The shares, which started 2005 at Dkr100.00, reached Dkr135.00 at year-end. 

BUILDING & CONSTRUCTION Mark Stockdale & team UBS SECOND TEAM Roger Collison & team Credit Suisse ■ THIRD TEAM Imran Akram, Paul Roger & team Deutsche ■ RUNNERS-UP Clyde Lewis & team Citigroup; Arnaud Pinatel & team Exane BNP Paribas 

With analysts in London, Frankfurt, Madrid and Paris, the four-person UBS team under Mark Stockdale, 45, is No. 1 for a third straight year. “This bunch fires on all cylinders,” says one grateful client. Throughout 2005 the group maintained its April 2004 buy on Persimmon, Britain’s largest home builder, on volume and price increases. Persimmon closed 2005 at 1,258.00p, up 92.4 percent since the call. The team also reiterated a five-year buy on French construction giant Vinci, which began 2005 at a split-adjusted E47.52 and soared to E72.65 by year-end — a 52.9 percent gain that outpaced the sector’s 48.6 percent advance. Another value buy, Spain’s Grupo Ferrovial, ended 2005 at E58.50, up 65.4 percent from a November 2004 call. Credit Suisse’s twomember team led by Roger Collison captures second place for a third consecutive year. Investors applaud the duo’s upgrade of German building-materials supplier HeidelbergCement last February, at E50.73, largely on the appointment of new management; shares hit E75.26 at year-end. The team upgraded British plasterboard maker BPB, at 365.00p in May 2004, on rising prices, and downgraded it to neutral in June 2005, at 523.50p, on strong U.S. competition. Unfortunately, the shift came just before July’s hostile takeover bid at 720.00p per share by French insulation maker Cie. de Saint-Gobain, which had raised its offer to the 775.00p per share that BPB agreed to in November. Nevertheless, says one client, “Collison is an analyst’s analyst.” Insights into the BPB takeover wowed clients of Imran Akram and Paul Roger, who lead Deutsche’s trio to debut at No. 3. “They kept us better informed than anyone else,” says a backer. They upgraded Saint-Gobain to a buy in October 2004, at E40.84, citing improving earnings; it ended 2005 at E50.25. BPB was named a top pick, at 489.50p, in April, on its strong balance sheet; it closed at 772.50p at year-end 2005. 

CAPITAL GOODS James Stettler & team DKW SECOND TEAM Patrick Marshall & team Credit Suisse ■ THIRD TEAM Michael Hagmann & team UBS ■ RUNNERS-UP Timothy Adams & team Citigroup; Charles Burrows & team Goldman Sachs; Lisa Randall & team Lehman; Andreas Willi & team J.P. Morgan 

DKW’s returning trio of first-teamers led by James Stettler took a bullish stand in January 2005, saying that many capital goods companies had excess cash to return to shareholders. Specifically, Stettler, 40, predicted windfall dividends at Swedish machine-tool maker Atlas Copco, which the team upgraded at 93.67 Swedish kroner, and at Swedish bearingsmaker SKF, upgraded at Skr65.47. Sure enough, each increased dividends by 20 percent, and by year-end their shares had rocketed to Skr177.00 and Skr111.50, respectively, handily beating the sector’s 37.6 percent advance. A January 2004 buy on France’s Schneider Electric, a supplier to electricity generators, as undervalued at E50.34, paid off when the stock charged up to E75.35 at the end of 2005. “Their good insights have certainly made us money,” asserts one investor. Some clients remark, however, that they miss former co-head Nicholas Wilson, who left in May 2005 for a hedge fund. Unranked last year, Patrick Marshall and his two Credit Suisse teammates earn No. 2 status with an impressive slate of successful stock calls. In November 2004 they rated Switzerland’s ABB, a maker of automation and energy-distribution equipment, an outperform, at Sf6.65, on its strong franchise and low valuation; it closed 2005 at Sf12.75. An August upgrade at E31.41 of France’s Alstom, an engine maker and power generator, on bottom-line growth, also proved prescient: the shares surged to E48.62 at year-end. “They keep their eye on the ball,” says one supporter. Although Michael Hagmann and his UBS teammate slip a notch to third, customers credit them with “solid fundamental company research and analysis” yet say they are “lackluster in predicting stock performance.” A January 2005 report on Siemens delved into the German manufacturer’s recent restructuring, but a concurrent upgrade to buy, at E60.17, proved prematurely optimistic. Siemens didn’t produce results until a late-year rally boosted shares to a year-end close of E72.40. 

CHEMICALS Timothy Jones & team Deutsche SECOND TEAM Themis Themistocleous & team UBS ■ THIRD TEAM Andrew Benson & team Citigroup ■ RUNNERS-UP Andrew Stott & team Credit Suisse; Jennifer Barker Lehman; Robyn Coombs & team Merrill Lynch; Michael Eastwood & team Morgan Stanley 

Even without former team leader Campbell Gillies, who now heads basic materials coverage, Deutsche, whose four-member team is led by Timothy Jones, 34, captures first place for a fifth consecutive year. Satisfied clients highlight a buy recommendation on Germany’s Linde, an industrialgases company, at E43.70 in July 2004, on its disciplined capital spending and strong Scandinavian and Eastern European franchises. The stock surged to E65.77 by year-end 2005. A May buy on Germany’s diversified giant BASF, near its 2005 low of E50.10, on management’s new emphasis on pricing rather than volume, also proved a winner; BASF closed the year at E64.71. “They really cover the territory,” explains one investor. In January 2005 the No. 2 UBS team — a trio captained by Themis Themistocleous that rises from runner-up — correctly turned bullish on the sector, largely on cash flow momentum; on average, European chemicals stocks advanced 28.1 percent last year. Investors appreciate the team’s September upgrade of Dutch specialty-products maker Akzo Nobel, at E35.03, partly on its Asenapine, a drug showing promise as an antipsychotic. The stock closed the year at E39.15. Another winner: maintaining an August 2004 reduce (at Sf78.65) on Swiss plastics producer CIBA Specialty Chemicals Holding through October 2005, when a switch to neutral, at Sf74.05, positioned investors for a year-end rally to Sf85.00. “Invariably, they have an interesting, value-added perspective,” explains an ally. Fueling the rise of Citigroup’s trio led by Andrew Benson to No. 3 from runnerup is “an unparalleled degree of service,” says a buy-sider, who adds, “They’ve brought more companies to meet us than just about anyone else.” Others single out the team’s February 2005 buy on Germany’s Lanxess, a small specialty manufacturer that had started trading as a public company the previous month at E15.02. Dubbed cheap at E16.15, the stock jumped to E26.96 at year-end.     

METALS & MINING Paul Galloway & team UBS SECOND TEAM John MacKinnon & team Deutsche ■ THIRD TEAM Jeremy Gray, Michael Shillaker Credit Suisse ■ RUNNERS-UP Michael Rawlinson & team Cazenove; Heath Jansen, Craig Sainsbury & team Citigroup; Daniel Fairclough, Jason Fairclough & team Merrill Lynch 

Taking top honors for a fifth straight time, the two-person UBS metals team that Paul Galloway leads is “unmatched for keeping a finger on the pulse of the industry,” says one investor. In May, soon after Belgium’s Umicore became a chemicals company by spinning off its mining interests, Galloway, 42, put a buy on the new entity, Cumerio, at E10.36. A downgrade in early July, at E14.20, on valuation concerns, was followed by an upgrade, at E14.66 in November, on free cash flow; Cumerio closed 2005 at E15.36. Other backers highlight an upgrade to buy on British platinum extractor Lonmin in May, at 969.97p, on forecasts of rising platinum prices. At year-end shares reached 1,613.00p, a gain of 66.3 percent, compared with a sector rise of 53.1 percent. Rising a notch to second is John MacKinnon and his Deutsche trio, on whom clients rely for “an endless stream of good insights,” as one says. Citing iron-ore and copper price hikes, the researchers upgraded British miner Rio Tinto, at 1,721.00p in April, and rival BHP Billiton, at 697.00p in June. By year-end the stocks had reached 2,655.00p and 949.50p, respectively. British metals company Vedanta Resources was a March buy at 405.00p, on valuation, and a mid-December hold, at 870.00p, on news developments; the stock ended 2005 at 868.50p. “The level of energy they bring to their coverage is nothing short of astonishing,” declares one investor. Unranked last year, Credit Suisse captures the third-team position by putting together a duo that “looks to be a formidable force,” says one client. In November former Morgan Stanley mining researcher Jeremy Gray joined former UBS analyst Michael Shillaker, who in December 2004 launched coverage with outperforms on two steel giants he dubbed steals — Britain’s Corus Group, at 52.75p, and Luxembourg’s Arcelor, at E15.78. The shares ended 2005 at 59.00p and E20.95, respectively. 

PAPER & PACKAGING Thomas Brodin Citigroup SECOND TEAM Mathias Carlson Deutsche ■ THIRD TEAM Myles Allsop UBS ■ RUNNER-UP Lars Kjellberg Credit Suisse 

The share performance of European paper producers was as flat as their products in 2005, but Citigroup’s Stockholm-based Thomas Brodin, who marks his fourth consecutive year in the top spot, is “prescient on the cycles,” marvels a buy-side client. Brodin’s January 2005 downgrade to sell on Holmen Group, a Swedish lumber and paperboard provider, stands out as well timed. The 41-year-old analyst correctly predicted that disappointing newsprint price increases would affect Holmen’s earnings; the stock plunged from Skr242.00 to Skr192.00 by May, at which point Brodin, who works alone, deemed it too cheap to resist and upgraded it to buy. By the end of the year, the shares had rallied to Skr262.50. Vaulting to the second team from runner-up is Deutsche’s Mathias Carlson. Working solo, the researcher last August highlighted the positive earnings impact of containerboard factory closures at Swedish giant Svenska Cellulosa. Although Mathias did not upgrade the stock, then at Skr272.50, he raised his price target for the shares; by year-end 2005, Svenska Cellulosa had climbed to Skr297.00. “Deutsche Bank keeps us up to date on global supply-demand trends like nobody else,” declares a customer, who commends Carlson for a November report on the subject. Repeating at No. 3 is UBS, with soloist Myles Allsop taking over from former team leader Harri Taittonen, who left the firm. Allsop found trading opportunities in midcaps, including British packager DS Smith, which he downgraded to neutral in January 2005, at 161.75p, on valuation. He upgraded the shares to a buy in November, at 136.50p, on price increases. A return to neutral in early December, at 165.50p, again on valuation came in time for a close of 166.00p at year-end. One client applauds his “thought-provoking thematic reports,” especially a November study explaining why China’s paper demand has not helped European producers. Says another, “He’s an agile moneymaker.” 

PHARMACEUTICALS Stewart Adkins, Johannah Walton & team Lehman SECOND TEAM Steve Plag & team Credit Suisse ■ THIRD TEAM Andrew Baum, Duncan Moore & team Morgan Stanley ■ RUNNERS-UP Alexandra Hauber & team Bear Stearns; Mark Purcell & team Deutsche; Mark Tracey &team Goldman Sachs; David Beadle & team UBS 

In a sector that gained 27.2 percent in 2005 and whose winning teams return in the same order for a third straight year, the No. 1 Lehman team, co-headed by Stewart Adkins, 48, and Johannah Walton, 44, delivers what one client calls “thorough, meaningful” research. Last January the four-person squad upgraded Germany’s Bayer to a buy, at E23.18, after it had trimmed research-and-development spending and installed new management. Concerns about margin pressure led to an equal weighting in mid-October, at E28.16, that turned out to be premature; Bayer closed the year at E35.29. A September 2004 nod to Britain’s GlaxoSmithKline, at 1,166.00p, on its improving pipeline and low valuation, turned out better: The stock closed 2005 at 1,469.00p. In second position is Credit Suisse’s two-member team captained by Steve Plag, who splits his time between London and Edinburgh. Investors highlight a March upgrade of Switzerland’s Roche Holding shares at Sf120.60, largely on the strength of the drug giant’s Avastin, a treatment for colorectal cancer that also shows promise against lung cancer; Roche ended the year at Sf197.30, a gain of 63.6 percent from the time of the call. “They do some very in-depth, thorough analysis and have good factual knowledge of the industry,” says one pension fund manager. In third place the Morgan Stanley trio co-headed by Andrew Baum and Duncan Moore stays a “step ahead of the news,” according to one satisfied client. In November 2004, buoyed by new clinical trial data on four Schering products, the team upgraded the German drugmaker to overweight, at E48.94. In February concern over a colorectal cancer treatment led the team to equal-weight Schering, at E53.86. When the drug proved ineffective, shares fell, but the team returned to overweight in March, at E48.90, believing the stock to be a bargain. Schering closed the year at E56.60. 

TECHNOLOGY/ SEMICONDUCTORS Uche Orji J.P. Morgan SECOND TEAM Janardan Menon & team DKW ■ THIRD TEAM Nicolas Gaudois & team Deutsche ■ RUNNER-UP Andrew Griffin & team Merrill Lynch

Uche Orji, 36, who joined J.P. Morgan in August 2001 armed with a Harvard Business School MBA and several years of buy-side experience, leads his firm to No. 1 from runner-up. Held in high regard for what one client calls “stock-picking mastery,” the solo analyst overweighted Royal Philips Electronics as cheap in March 2003, at E12.41. In April 2005, at E20.77, he added the Dutch semiconductor and consumer-goods maker to Morgan’s list of best ideas, citing cost reductions and growing emerging-markets demand. Philips closed the year at E26.25, up 26.4 percent from his call; the sector gained 14.6 percent in 2005. Another investor commends Orji for “astutely calling the bottom of Arm Holdings,” a British manufacturer of semiconductor-related technologies. Last April, Orji viewed Arm as undervalued and upgraded it to overweight, at 94.25p. By year-end it was trading at 121.00p. DKW’s two-member team captained by Janardan Menon slips one notch to second. A January 2004 buy on ASML Holding, a Dutch developer of lithographic chip-making processes, at E16.38, on expected sales growth, proved too early. But when shares slid to E11.81 in January 2005, the duo named it their top pick, based on improving utilization and demand. ASML climbed to E16.90 by year-end. Several investors applaud DKW for keeping them out of German chip maker Infineon Technologies, downgraded to hold in November 2004, at E8.50, on pricing pressure, and lowered to reduce in February, at E8.07, as dynamic random access memory chip prices fell; Infineon closed the year at E7.74. Moving down a peg to third, Deutsche receives praise for “independent views.” Headed by Nicolas Gaudois, the twoperson squad is prized for a December 2004 downgrade to hold, at E14.97, of Switzerland’s STMicroelectronics, which produces semiconductors for cell phones, on earnings fears. The shares dipped below E11.00 in April and May; at year-end they closed at E15.17. 

TECHNOLOGY/SOFTWARE Matthew Hammond & team Credit Suisse SECOND TEAM Michael Briest UBS ■ THIRD TEAM Marc Geall & team Citigroup ■ RUNNERS-UP Mark Bryan & team Deutsche; Mohammed Moawalla, Yara Yazbeck & team Goldman Sachs; Raimo Lenschow & team Merrill Lynch; John Segrich & team J.P. Morgan; Gary Rollo & team Morgan Stanley 

Led by Matthew Hammond, Credit Suisse’s two-member team leaps one spot to No. 1. Hammond, 31, who joined the firm in 1997 from Bristol University, earns praise for “tailoring his sharp insights to customer needs,” says a hedge fund manager, who singles out a February 2005 recommendation of Sage Group, a British accounting-software threedeveloper the team dubbed cheap at 199.00p. By year-end, Sage had advanced to 258.00p. Another coup: a buy on Computacenter, a British business solutions provider, on a price dip in late June, at 181.00p; it closed the year at 255.00p, a gain of 40.9 percent in just over six months, versus a sector gain of 20.6 percent for the year. UBS soloist Michael Briest vaults two levels to second place, winning points for a January 2005 upgrade to buy on France’s Business Objects, an e-business applications supplier, at E17.70, after the company undertook an extensive reorganization to cut costs and streamline sales and marketing. When Briest returned it to neutral in early December, on valuation, the stock had reached E34.40. Praised by one investor for a “practical sense of how these businesses work and what their customers want,” Briest is highly regarded by another for written work that “doesn’t waste one’s time.” Though hailed by customers for their “agility,” Marc Geall’s Citigroup team of three slips a notch to third. The analysts score high marks for reports on Autonomy Corp., a British enterprise-infrastructure builder, tagged a buy in January 2005, at 176.25p, largely on its new products. Autonomy sailed to 245.00p by early June, when they downgraded to hold, on valuation. In July they reversed course again, at 250.25p, on a joint venture to launch a Web search application in China. When the stock jumped to 349.75p in September, the team reverted to hold, to lock in profits, but missed a run-up to 391.25p at year-end.