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Investor Channel is the communication channel between Pirelli and the financial community. Analysts, shareholders and web users can use the channel for direct dialogue with the Group. The blog is moderated by Pirelli Investor Relations.

PEERS & MARKETS

The main European stock markets were up in the week from the 6th to the 10th of May (Milan +2.1%, London +2.5%, Frankfurt +1.9%, Paris +1.0%), reaching the highest levels since June 2008 (Stoxx 600). Investor optimism was supported by better than expected economic data (German industrial production +1.2% in March, Chinese export +14.7% in April) while efforts to stimulate growth through monetary easing continued: Australia and South Korea trimmed their benchmark interest rate by 25 bps in the week (taking rates to 2.75% and 2.5%, respectively).

Auto & Parts stocks advanced in line with the overall market (Stoxx A&P +0.8% in the week), with tyre companies gaining almost 3 percentage points. According to broker Morgan Stanley, good Q1 2013 results by tyre makers eased investor concerns about industry pricing, given the current environment of falling raw material input cost and soft demand.

Pirelli shares were up strongly in the week (+6.1%, closing at 8.7€). Daily average trading volume totaled 3.8 million shares, 10.3 million on the day following the presentation of Q1 2013 results (Pirelli closed +7.3% on that day). Results were in line with market expectations and showed an industry-leading growth in volumes (+3.9% thanks to Pirelli’s exposure to emerging markets and the Premium segment) as well as the benefits of a distinctive positioning in the Industrial business (profitability was up 50% yoy). Pirelli confirmed the 2013 targets announced in March.

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PEERS & MARKETS

The main European stock markets were down in the week from the 15th to the 19th of April, 2013 (Milan -0.1%, London -1.5%, Frankfurt -3.7%, Paris -2.1%, Madrid -1.6%). Investor worries were linked to renewed uncertainties on global growth, after the IMF revised global GDP forecasts downwards: the world economy is now expected to expand by 3.3% in 2013 (previous estimate was 3.5%) and 4% in 2014 (confirming previous data). Moreover, the pace of economic activity in China disappointed, with GDP up 7.7% in Q1 2013 (versus estimates of +8%) mostly due to lower industrial production and exports to Europe, the United States and Japan.

Auto & Parts stocks retreated during the week, with the Stoxx A&P index declining by 4%. In anticipation of the forthcoming reporting season, Morgan Stanley advised to reduce exposure to the sector and in particular to those stocks most at risk of revising 2013 guidance downwards and having lower growth prospects. The European car marked proved continued to contract during the month of March, to the tune of -10% yoy. According to Sanford Bernstein, moreover, a weaker Yen and a slowing Chinese car market could imply little room for 2013 profitability improvement for the European Premium car makers.

Pirelli closed the week at 7.37€, advancing by 0.3% after an average trading volume of 3.5 million shares per day. During the week, broker Intermonte revised its stock rating upwards from “Neutral” o “Outperform”, noting that the current stock price represent an attractive entry point and already discounts investor worries on the tyre sector.
Consensus Target Price stood at 9.3€, with 75% of analysts advising to “Buy” or “Hold” the stock.

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PEERS & MARKETS

European equity indices recorded gains in the week from the 8th to the 12th of April, 2013 (Milan +3.5%, London +2.2%, Frankfurt +1.1%, Paris +1.8%, Madrid +3.1%). Investor sentiment was fuelled by the intention of the Bank of Japan to continue the monetary easing “beyond a 2-year period” until the target inflation rate of 2% is reached. In addition, the increase in Chinese imports (+14% in March), signaled the well-being of the country’s internal demand. Following 5 consecutive days of gains, European equities retreated on Friday due to disappointing US retail sales data (-0.4% in March) and fears that the Cyprus government might need more financial help than initially anticipated.

Auto & Parts stocks were in negative territory, with investors tactically reducing their exposure to the sector after poor auto sales in March and following comments from key automakers pointing at a difficult market environment in Europe, with an impact on Q1 2013 results.

Pirelli stock was down in the week and closed at 7.34€, with daily average volume traded of approximately 4.5 million shares. JP Morgan initiated coverage of the stock with a “Neutral” recommendation and a 9.5€ Target Price. According to the analyst, Pirelli and the sector currently discount short term fears on European volume and pricing trends. The broker agrees with the decision to postpone the presentation of the Industrial Plan, now scheduled for November in order to provide better visibility on the medium-long term context of reference.

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