The main European stock markets were up in the week from the 13th to the 17th of January, 2014 (Milan +2%, London +1.3%, Frankfurt +2.8%, Paris +1.8%, Madrid +1.7%), on the back of supportive macro data: the World Bank upgraded its global GDP growth expectations for 2014 (+3.2%, previous estimate 3%), and positive news came out of US retail sales (+0.4% in December) as well as industrial production in Europe (+1.8% in November).
Auto & Parts stocks were up strongly (+5% vs Stoxx 600 +1.8%); mass-market OEMs led the gains, as the European car market showed its strongest monthly gain since December 2009 (+13.3% yoy in December, UK +23.4%, Germany +5.4%, Italy +1.4%). Moreover, investor sentiment was supported by positive commentary coming from the Detroit motor show: the European car market should return to moderate growth in 2014 (+3% according to Goldman Sachs).
Pirelli shares closed the week up 7.1% at 12.63€ with an average daily trading volume of 3.6 million shares.
J.P. Morgan confirmed its positive view on the stock (Overweight rating, 13.5€ Target Price): according to the analyst, Pirelli’s operations in Russia will break even in 2014 and the company will increase its retail penetration both in Europe and South America, maintaining a strong pricing power and reaching an Ebit margin of 14.5% in 2015.
Consensus target price stood at 12.2€ with 83% of analysts recommending to Buy or Hold the shares.