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Investor Channel is the communication channel between Pirelli and the financial community. Analysts, shareholders and web users can use the channel for direct dialogue with the Group. The blog is moderated by Pirelli Investor Relations.

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PEERS & MARKETS

The main European stock markets were down in the week from the 22nd to the 26th of September, 2014 (Milan -0.8%, London -2.8%, Frankfurt -3.2%, Paris -1.5%), following disappointing manufacturing data in– modest growth in Europe (index at 50.6 vs 50.7 in August) and Germany (50.3 vs 51.4 in August) – and commentary by Chinese finance minister ruling out “major policy adjustments” to stimulate economic growth, despite recent signs of weakness and contrary to investor’s expectations.

Auto & parts stocks were down by more than 4 percentage points (European index -4.3%, Stoxx 600 -1.8%). Besides concerns of a slowdown in the Chinese economy, investors took a more cautious approach in the short term given the developments of the truck sector (2014 outlook downgrade by an important player, expecting Market contraction in Europe, Russia and Brazil) and the reduction in the European car replacement tyre market (-2% yoy in August).

Pirelli shares closed the week at 10.90€ (-7%), performing in line with tyre peers. Average daily volume of shares traded was 2.9 million, against a 3-month average of 2 million. Broker Credit Suisse published an update report on the stock, confirming the “Overweight” rating and upping the Target Price to 15€ (+0.5€); according to the analysts, positives include the solid volume and price/mix trend as well as management’s execution of the Premium strategy. Consensus target price is at 13.06€ with more than 85% of analysts recommending to “Buy” or “Hold” the shares.

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PEERS & MARKETS

The main European stock markets were up in the week from the 15th to the 19th of September, 2014 (Stoxx 600 +1.2%, Milan -0.5%, London +0.5%, Frankfurt +1.5%, Paris +0.4%). Investors reacted positively to the outcome of the Scottish independence referendum and to commentary by the Chairman of the Federal Reserve, maintaining that it would keep rates on hold for a “considerable time” after QE ends. In addition, the People’s Bank of China took steps to ease liquidity to the country’s financial sector by injecting 81$/bln.

Auto & Parts stocks were flat in the week (sector index +0.2%). According to data released by ACEA, the car marked confirmed its weakness in August: +1.8% yoy vs 6% YTD and +5.6% yoy in July. European market leader is VW with a share of 28.1%.

Pirelli shares closed the week up 0.3% at 11.72€ with an average daily trading volume of 2.1 million shares (in line with 3 month average).
Global broker Berenberg initiated coverage on the stock with a “BUY” recommendation and a 14.5€ Target Price; underpinning the analyst’s positive stance is the forecast mix improvement towards product segments with higher profitability (tyres with rim sizes above 17 and 18 inches, the focus of Pirelli’s capacity investments) and the favorable cash generation profile.
Consensus Target Price moved to 13.04€ with 86% of analysts recommending to buy or hold the shares.


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PEERS & MARKETS

The main European stock markets were down in the week from the 8th to the 12th of September 2014 (Milan -1.5%, London -0.7%, Frankfurt -1%, Paris -1%). Investor focus revolved around monetary policies of main central banks, with the US Federal Reserve expected to provide more details on the timing of the likely upcoming interest rate hike. Cautiousness, moreover, was warranted by the uncertain outcome of the Scottish referendum. Oil & Gas stocks underperformed (-2.6% in the week) as oil prices fell below the 100$/barrel mark (Brent).

The Auto & Parts sector was down by 3 percentage points (against a -0.9% by the European Blue Chips in the Stoxx 600). Tyre stocks discounted the contraction of the European market in August (Replacement -2% yoy vs +3% YTD, OE -2% yoy vs +6% YTD), which led broker Goldman Sachs to a more cautious view on the speed of the current market recovery.

Pirelli shares closed the week at 11.68€ (-4.3%) in line with peers, with an average daily trading volume of 2 million shares (in line with 3-month average). The stock outperformance since H1 2014 results, which limits the valuation upside, brought JP Morgan analyst to revise down the rating on the stock from “Overweight” to “Neutral”, while confirming both estimates and the 13€/share Target Price. The positive view on Pirelli’s execution of the Premium Strategy was confirmed. Consensus Target Price is confirmed at 12.97€ with more than 85% of analysts recommending to Buy or Hold the shares.


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