21/11/2011

PEERS & MARKETS

Main stocks markets (Milan -3.5%, London -3.3%, Frankfurt -4.2%, Paris -4.8%) kept being influenced by uncertainties over the macro situation and the Euro area during the week from the 14th to 18th of November.
Strong sales over the auto&parts sector (-8.0%), after the recent market trends (-1.4% the car registrations in Europe, car sales down in China, tyre truck volumes down in Europe and North America).
Pirelli closed the week at €6.695 (-6.5%), outperforming the auto&parts sector (+1.5pp) and its main peers (+3.9pp vs Michelin, +1.1pp vs Continental, +5.2 vs Nokian). Two upgrades on the stock: Cheuvreux (€8.9 from €8.2) and Citi (€8.5 from €8.0). According to Cheuvreux, Pirelli targets are ambitious but doable, thanks to a clear focus on Premium and the continous search for internal efficiencies. The broker estimates are set towards the higher end of the guidance. Further stock upside is linked to a re-rating of the sector.
The average consensus Target Price is €8.23€ with BUY recommendations from 92% of brokers.