The main European stock markets were up in the week from the 1st to the 5th of July 2013 (London +2.6%, Frankfurt -1.9%, Paris +0.4%, Madrid +1.4%, Milano +1.9%), supported by the central bankers of Europe and England pledging to keep interest rates at the current low levels. Positive news on the real economy came from the United States, where data from the manufacturing and the construction sectors surprised on the upside.
Auto & Parts stocks advanced in line with the overall market (sector index +2% during the week), thanks to the outperformance of French OEMs: according to Goldman Sachs, European light vehicle production should pick up in the third quarter on the back of improving consumer confidence, as confirmed by the reduction of stock witnessed in the distribution channels.
Pirelli closed the week up 0.7% at 8.96€ with an average daily traded volume of 1.7 million shares. In an update report, broker UBS confirmed its positive view on the stock (rating BUY) and improved the valuation to 12€ (+2€). According to the analyst, Pirelli’s cash flow generation potential is particularly attractive, given the positive outlook of the Truck business in South America, the expected reduction in capital expenditures as well as the improvement in net working capital management.
Average Target Price stood at €9.55 (+7% upside on Friday’s closing price), with 83% of analysts advising to Buy or Hold the stock.