The week from July 15 to 19 was a positive one for the major European Markets following the good macroeconomic newsflow (Milan +4.5%, London +1.3%, Frankfurt +1.4%, +1.8% Paris, Madrid +1.3%). In the semi-annual testimony to the Congress Fed Chairman Bernanke reassured markets on the continuation of a highly accommodative economic policy: a slowdown in liquidity injections will take place only in case of strong acceleration in the U.S. economy. Positive signals also came from the European Central Bank that were expanding the list of assets accepted as a collateral to make it easier to purchase bonds from countries in difficulty.
Another positive week for European Auto&Parts sector (+2.6%) pending the full start of the reporting season for the second quarter 2013. The index ended the week with the best sector performance YTD: +17.7%, +10.5 percentage points versus the Stoxx 600. European tyre stocks was also up after positive data on market in June that confirmed the good performance of Emerging Markets and an ongoing stabilization in Europe.
Pirelli ended the week at € 9.54, up 10.9% compared to last week with an average daily trading volume of about 3.3 million pieces. In addition to the positive indications that emerged from the data of the tire market in June (in particular the strong performance of Brazil), the stock’s performance reflected the upgrade by JP Morgan to Overweight (from Neutral) and the increase of target price to 12 € (9.5 € ).
The consensus target price therefore stands at € 9.70 with 45% coverage of the recommendation with “Buy”.