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Investor Channel is the communication channel between Pirelli and the financial community. Analysts, shareholders and web users can use the channel for direct dialogue with the Group. The blog is moderated by Pirelli Investor Relations.


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PEERS & MARKETS

Major international stock markets were up in the week from April 22 to 26 (Milan +5.1%, London +2.2%, Frankfurt +4.8%, Paris +4.3%, +4.8% 9 Madrid). After the macroeconomic data from Germany in April (PMI at 47.9 points, below the consensus and the critical threshold of 50 points; Ifo economic activity down to 104.4 vs 106.2 pts estimated) markets relied on a cut of official rates by ECB to support economy (expected May 2nd a decrease to 0.5% from the current 0.75%).

By sector, purchases was focused on Auto & Parts stocks (+7.3% the Stoxx Auto Index) following the beginning of the reporting season. After the publishing of 1st quarter data that showed the weakness of demand, traders are betting on a trend of improvement in the coming quarters. This hypothesis was validated by early indications from the Industry: truck recovery in orders in March, general automotive sector re-stocking, tyre recovery in sales for the month of April.

Pirelli ended the week at € 7.68 (+4.3%) with an average daily trading volume of about 2 million.

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PEERS & MARKETS

The main European stock markets were down in the week from the 15th to the 19th of April, 2013 (Milan -0.1%, London -1.5%, Frankfurt -3.7%, Paris -2.1%, Madrid -1.6%). Investor worries were linked to renewed uncertainties on global growth, after the IMF revised global GDP forecasts downwards: the world economy is now expected to expand by 3.3% in 2013 (previous estimate was 3.5%) and 4% in 2014 (confirming previous data). Moreover, the pace of economic activity in China disappointed, with GDP up 7.7% in Q1 2013 (versus estimates of +8%) mostly due to lower industrial production and exports to Europe, the United States and Japan.

Auto & Parts stocks retreated during the week, with the Stoxx A&P index declining by 4%. In anticipation of the forthcoming reporting season, Morgan Stanley advised to reduce exposure to the sector and in particular to those stocks most at risk of revising 2013 guidance downwards and having lower growth prospects. The European car marked proved continued to contract during the month of March, to the tune of -10% yoy. According to Sanford Bernstein, moreover, a weaker Yen and a slowing Chinese car market could imply little room for 2013 profitability improvement for the European Premium car makers.

Pirelli closed the week at 7.37€, advancing by 0.3% after an average trading volume of 3.5 million shares per day. During the week, broker Intermonte revised its stock rating upwards from “Neutral” o “Outperform”, noting that the current stock price represent an attractive entry point and already discounts investor worries on the tyre sector.
Consensus Target Price stood at 9.3€, with 75% of analysts advising to “Buy” or “Hold” the stock.


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PEERS & MARKETS

European equity indices recorded gains in the week from the 8th to the 12th of April, 2013 (Milan +3.5%, London +2.2%, Frankfurt +1.1%, Paris +1.8%, Madrid +3.1%). Investor sentiment was fuelled by the intention of the Bank of Japan to continue the monetary easing “beyond a 2-year period” until the target inflation rate of 2% is reached. In addition, the increase in Chinese imports (+14% in March), signaled the well-being of the country’s internal demand. Following 5 consecutive days of gains, European equities retreated on Friday due to disappointing US retail sales data (-0.4% in March) and fears that the Cyprus government might need more financial help than initially anticipated.

Auto & Parts stocks were in negative territory, with investors tactically reducing their exposure to the sector after poor auto sales in March and following comments from key automakers pointing at a difficult market environment in Europe, with an impact on Q1 2013 results.

Pirelli stock was down in the week and closed at 7.34€, with daily average volume traded of approximately 4.5 million shares. JP Morgan initiated coverage of the stock with a “Neutral” recommendation and a 9.5€ Target Price. According to the analyst, Pirelli and the sector currently discount short term fears on European volume and pricing trends. The broker agrees with the decision to postpone the presentation of the Industrial Plan, now scheduled for November in order to provide better visibility on the medium-long term context of reference.


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