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.