The 18 to 22 October week was good on all the major Europan markets (Milan +2.3% London +0.7% Frankfurt +1.7%).
The decision taken by China to raise their official interest rates caused a few initial uncertainties with markets on the upside following the many recent three-month financial reports reviews with data better than expected both in Europe and the US (Nokia, Basf, Bayer, Bic, Schneider Electric, Apple among others).
The Auto&Parts sector is up (+3.4% European reference index, best industry performance of the week) due to the positive sentiment expressed for the industry as well as good FIAT (+2.9%) and Renault (+8.9%) three-month results. Also the Industrial is up: +2.4% EURO STOXX index. Still a top week for Pirelli with 6.175 euros closing (value net from Pirelli RE stock distribution) with a + 3.0% performance. This is in line with the volume average of approx. 3.5 million units traded. This makes it the best performer on the Mib FTSE with a plus 41 opp. since the beginning of this year.
TP reviews keep on being on the raise with Centrobanca (7 euros – +71 euro/cent), Unicredit (7euros from 6.60 euros), Banca Aletti (7.5 euros from 6.7 euros) and Centrosim (6.7 euros from 6 euros) after they issued their recommendations. The common drivers for upgrades were the review on the Tyre estimates, very good positioning compared with competitors, growing exposure on the emerging markets and the positive sentiment on the disclosure of the new Industrial Plan on November 4.
While focusing on the core business, analysts gave a positive assessment to the dismissal of the Broadband which together with the split between Pirelli & C and Pirelli RE (hereafter PRELIOS) will cause the removal of the holding discount from the stock value.
The consensus TP is worth 6.88 euros with 78% recommendations to BUY.
The major European peers are being challenged: Michelin +3.2%, Continental +4.5%, Nokian -0.5%.