05/10/2010

PEERS & MARKETS

International stock markets ended the week September 27th – October 1st negatively (Milan -1.1%, London -0.1%, Frankfurt -1.4% and Paris -2.4%). Ongoing conflicting macroeconomic data, expected decisions by Ecofin on the debt of non-core countries from the Euro zone and fear on Irish and Portuguese bonds have raise doubts on purchase prices and encouraged profit-taking.
The Oil&Gas sector and the Technology sector have shown good performance of +1.6% and +0.33%, respectively; which are the only sectors that ended positively.
Pirelli showed a positive trend for most part of the week, exceeding the share price of 6 euros (€6.06 reported last September 30), thereby reflecting the increase on US prices (up to 7% on the entire range) and reflecting the positive opinion from stock analysts during the Paris Motor Show on Pirelli’s strategic position vs. its peers. However, end-of-the-week profit-taking (-2.6% European Reference Index) lead to drop in Pirelli stock to € 5.96 (-0.4%). Volumes settled at an average of 5 million pieces (higher compared to the last three months).
The Consensus target price for Pirelli settles at €6.35 (a buy recommendation prevails on coverage by analysts: 79%).
Michelin drops in view of the unexpected announcement on the share capital increase of  €1.2 billion, ending the week with a 14.8% decline. The stock also suffered downgrades by Merrill Lynch and Morgan Stanley.
However, the market reacted different to the announcement of Continental (+0.9%) to issue an additional bond of €1.25 billion (in 2 tranches with maturity on 2016 and 2018 and coupons of 6.5% and 7.125%, respectively). Nokian also ended the week positively (+1.3%).
Rebound by Pirelli RE of 1.1% to €0.44.