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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.

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PEERS & MARKETS

The main European stock markets were up in the week from the 15th to the 19th of September, 2014 (Stoxx 600 +1.2%, Milan -0.5%, London +0.5%, Frankfurt +1.5%, Paris +0.4%). Investors reacted positively to the outcome of the Scottish independence referendum and to commentary by the Chairman of the Federal Reserve, maintaining that it would keep rates on hold for a “considerable time” after QE ends. In addition, the People’s Bank of China took steps to ease liquidity to the country’s financial sector by injecting 81$/bln.

Auto & Parts stocks were flat in the week (sector index +0.2%). According to data released by ACEA, the car marked confirmed its weakness in August: +1.8% yoy vs 6% YTD and +5.6% yoy in July. European market leader is VW with a share of 28.1%.

Pirelli shares closed the week up 0.3% at 11.72€ with an average daily trading volume of 2.1 million shares (in line with 3 month average).
Global broker Berenberg initiated coverage on the stock with a “BUY” recommendation and a 14.5€ Target Price; underpinning the analyst’s positive stance is the forecast mix improvement towards product segments with higher profitability (tyres with rim sizes above 17 and 18 inches, the focus of Pirelli’s capacity investments) and the favorable cash generation profile.
Consensus Target Price moved to 13.04€ with 86% of analysts recommending to buy or hold the shares.


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PEERS & MARKETS

The main European stock markets were down in the week from the 8th to the 12th of September 2014 (Milan -1.5%, London -0.7%, Frankfurt -1%, Paris -1%). Investor focus revolved around monetary policies of main central banks, with the US Federal Reserve expected to provide more details on the timing of the likely upcoming interest rate hike. Cautiousness, moreover, was warranted by the uncertain outcome of the Scottish referendum. Oil & Gas stocks underperformed (-2.6% in the week) as oil prices fell below the 100$/barrel mark (Brent).

The Auto & Parts sector was down by 3 percentage points (against a -0.9% by the European Blue Chips in the Stoxx 600). Tyre stocks discounted the contraction of the European market in August (Replacement -2% yoy vs +3% YTD, OE -2% yoy vs +6% YTD), which led broker Goldman Sachs to a more cautious view on the speed of the current market recovery.

Pirelli shares closed the week at 11.68€ (-4.3%) in line with peers, with an average daily trading volume of 2 million shares (in line with 3-month average). The stock outperformance since H1 2014 results, which limits the valuation upside, brought JP Morgan analyst to revise down the rating on the stock from “Overweight” to “Neutral”, while confirming both estimates and the 13€/share Target Price. The positive view on Pirelli’s execution of the Premium Strategy was confirmed. Consensus Target Price is confirmed at 12.97€ with more than 85% of analysts recommending to Buy or Hold the shares.


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PEERS & MARKETS

The main European stock markets were up in the first week of September (Milan +4.6%, London +0.5%, Frankfurt +2.9%, Paris +2.4%). Positive investor mood was sustained by the cease fire between Russia and Ukraine as well as action by the European Central Bank which reduced benchmark interest rates to 0.05% and announced the intention to buy Asset Backed Securities with the aim to stimulate economic growth and fight deflation. Currency markets reacted strongly, pushing the Euro below the 1.3 mark against the US dollar.

The Auto & Parts sector was the best performer in Europe with a +3.8% gain led by automakers.
According to broker Exane BNP Paribas, despite 2015 expectations looking too high (global auto market growth revised down from +5.5% to +3.5%), the positive recovery cycle is not over yet. The analyst estimates European sector earnings to grow by 13% per annum between 2015 and 2016.

Pirelli shares closed the week at 12.2€, up 4.9%, with an average daily trading volume of 2.3 million shares (3 month average: 2 million).
Goldman Sachs published an update report on the stock confirming the Neutral rating and upping the valuation to a Target Price of 14.1€ (+0.5€): 2014 estimates are in line with targets, as improving price/mix and efficiencies will compensate for short term risks linked to the difficult market scenario in South America and Russia; the analyst confirmed the positive view on the execution of the Premium Strategy.
Consensus Target Price stood at 12.97€ with more than 85% of analysts advising to Buy or Hold the shares.


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