The week 31 January to 4 February was a positive one for the principal international markets (Milan +2.7 %, London +2.0%, Paris +1.6%, Frankfurt +1.1%).
At sector level, only industrial shares (European reference index –0.6%) and Auto shares (-2.2%) were hit by sales , while the raw materials sector continued to be buoyant (+5.9%), favourably influenced by the further rise in commodities prices and the weekness of the dollar. Bank shares also rose (+2.4%) despite the ECB decision to retain the reference interest rate at 1% (set in May 2009).
Tyre shares performed better than the sector as a whole, with Pirelli closing the week at €5.64 (+0.5%, +2.7pp vs Stoxx Auto); with an average trading volume of approximately 3 million per day. Deutsche Bank issued an update confirming its Target Price of €7.6 for Pirelli, reiterating its BUY opinion. Positive results are expected for the 4th quarter of 2010, which will be published on 8 March 2011: Pirelli will be among the main players to compensate for the impact of raw material prices on EBIT, with its improved price-mix.
Continental and Michelin also rose, by 0.5% and +4% respectively.
The consensus target price for Pirelli was €7.0, and the recommendation is primarily Buy (63% of analysts’ coverage).