The main European stock markets were down from the 3rd to the 7th of June 2013, for the third consecutive week (Milan -3%, London -2.6%, Frankfurt -1.1%, Paris -1.9%, Madrid -0.6%). Concerns continued that the Federal Reserve might soon scale back its bond-buying program and the ECB governor confirmed that no unconventional stimulus measures are in the agenda for Europe. According to the European Central Bank, moreover, growth in the region is expected to return no earlier than year-end 2013; the benchmark interest rate was kept at 0.5%.
Auto & Parts stocks retreated by approximately one percentage point (Stoxx Auto & Parts -0.9%). German automakers underperformed the index, on the news that Chinese authorities could impose duties on imports of large cars (engines above 2 liters). Additionally, after having recorded growth in April (+4% yoy) the German car market contracted in May (-9.9% yoy).
Pirelli shares were up 0.4% in the week, closing at 8.98€ thereby making up for the dividend payment (0.32€ per share). Daily average trading volume was at 3.2 million shares, or 20% above the average of the last 30 days. Broker Intermonte published an update on the stock and upgraded the recommendation on from “Hold” to “Buy”. According to the analyst, the new shareholder structure marks the beginning of a new phase of the equity story, and the stock should benefit in the short term from a recovery of the European tyre market as well as stabilizing consensus estimates. Additional valuation upgrades came from HSBC (Buy, TP from 10€ to 11€) and KeplerCheuvreux (Hold, TP from 8.5€ to 9€). Pirelli Target Price stood at 9.4€ (+15% vs market price) with 83% of analysts advising to “Buy” or “Hold” the stock.