24/01/2011

PEERS & MARKETS

Different trends in European stockmarkets (Milan +3%, Paris +0.9%, Frankfurt -0.2%, London -1.8%). The industrial sector rotation favouring bank stock continued (DJ Stoxx Banks 1.5%) while the sectors and stock that outperformed in 2010 saw the highest sales: this was the case in the Auto & Parts segment, for which the sector index fell –4.2% over the week (+44.5% in the 2010 FY)
Pirelli fell 1.6% to close the week at €5.8, outperforming the European Auto&Parts index by 2.6pp.
The market reacted positively to the announcement of price increases (+3% on Passenger, +7% on Industrial in EMEA and Asia from the beginning of March). For analysts (Unicredit, Chevreux, Banca IMI, etc.) this increase is likely to success, given the strong demand; moreover, Pirelli’s solid track record on the price/mix will allow it to minimise/offset the steep increase in the cost of raw materials.
The RBS valuation of Pirelli shares was revised upward, bringing the TP to €8.0 (from €7.0) For the broker, the focus on the premium and emerging markets will be effective growth levers in the coming years.
The BUY view was confirmed by Equita and Interomonte.
The consensus target price was €7.1, and the recommendation is primarily Buy (63% of analysts’ coverage).