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.
The main European stock markets were almost flat in the week from the 18th to the 22nd of November (Milan +0.7%, London -0.3%, Frankfurt +0.5%, Paris -0.3%, Madrid -0.2%). According to the minutes of the FED meeting, tapering of economic stimulus (worth 85 billion $ per month) should begin gradually in the coming months; economists surveyed by Bloomberg predicted it to start as early as March 2014. Within the main economic data released during the week, Chinese manufacturing activity in November surprised negatively and so did business confidence in Germany; positive news came out of US retail sales.
Auto & Parts stocks were up during the week (+1.9%), led by auto manufacturers supported by the positive trend of the car market in October (global market +9.3% in the month, +2.1% YTD). On a regional basis, China outperformed with a monthly growth rate of +24%, followed by Japan (+18%), USA (+11%) and Europe (+5%).
Pirelli closed the week at 11.31€, up 4.6% trading an average of 2.2 million shares per day, in line with the previous 3 months.
3 global brokers published an update report on the stock (HSBC, UBS and Goldman Sachs), upgrading their valuation by an average of 1.3€ per share; analysts appreciated the Industrial Plan’s focus on cash flow generation, as well as greater details on the Industrial Business and regional strategy.
Consensus Target Price taking into account the 15 most recent publications stood at 12.15€ with 50% of analysts advising to “BUY” the shares.
The main European stock markets were mixed in the week from the 11th to the 15th of November, 2013 (Milan -1.4%, London -0.2%, Frankfurt +1%, Paris +0.7%, Madrid -0.5%) with the Stoxx 600 index closing at +0.1%. Negative news came out of Europe with GDP growth slowing down to +0.1% in Q3 (after the +0.3% reported in Q2), whereas comments from future Fed Chairman Janet Yellen suggested that tapering of monetary stimulus will happen very gradually.
Auto & Parts stocks were flat (sector index +0.4%). Broker CITI confirmed its positive view on the sector at the end of Q3 reporting season: investor focus is now on technological innovation to reduce emissions and on the impact of foreign exchange fluctuations, given the increasingly global reach of the industry. Despite the good sector performance ytd (+32%), auto stocks are still among the least expensive within Europe (9x 2014E P/E vs EU average of 13x).
Slight profit taking on Pirelli shares, which closed at 10.81€ (-2.2%) after the +8.3% of the two days following the presentation of the Industrial Plan. 5 brokers published an update report during the week, upgrading their estimates especially for what concerns cash generation; according to KeplerCheuvreux, Pirelli is starting a new phase of value creation after the high investments of recent years. Citi (+2.6€ at 11€), Deutsche Bank (+1.5€ at 11€), Banca Aletti (+1.5€ at 13.5€) and KeplerCheuvreux (+0.8€ at 11€) improved their valuation on the stock, whereas Bank of America Merril Lynch trimmed Pirelli’s target price to 11.6€ (from 11.8€).
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