European stock markets were mixed in the week from the 12th to the 16th of May 2014 (London +0.6%, Frankfurt +0.5%, Paris -0.5%, Madrid -0.1%), as Eurozone GDP growth fell short of expectations: +0.2% as compared with Q4 2013, estimates of +0.4% growth. The Milan stock exchange underperformed (-3.5% in the week), after Italy’s GDP unexpectedly contracted (-0.1% vs expectations of +0.2%). Concerns over the pace of recovery of the European economy led investors to reduce exposure to the most cyclical sectors: media -2.2%, travel and leisure -3.3%, construction -1.9%.
Auto & parts stocks were down approximately 1.5 percentage points, mass OEMs in particular. According to data published by ACEA, car sales growth in Europe is slowing down (+4.2% yoy in April, +7.1% YTD).
Pirelli shares closed the week at 11.47€ (-3.8%) with an average volume of 2.4 million shares traded per day (-32% vs three-month average), contracting in line with European tyre peers. Consensus target price stood at 12.68€ with 84% of analysts recommending to buy or hold the shares.