PEERS & MARKETS

Major European stock exchanges was sharply down in the week from May 14th to 18th 2012 (Milan -7.1%, -5.5% in London, Frankfurt -4.7%, -3.9% Paris, Madrid -6.1%). Markets were affected by the worsening political situation in Greece which will have to resort to new elections, and the ECB statement of no new intervention to stimulate the European economy.

The European Auto&Parts sector was down by 7.7% penalized by macroeconomic concerns and fears of a slowdown in the Chinese market. Pirelli ended the week better than the sector at € 8,305 (-3.6%) with an approximate average of 4.6 million shares traded daily.

PEERS & MARKETS

The main European stock markets were mixed last week (Milan +0.9%, London -3.3%, Frankfurt +0.3%, Paris -1%, Madrid +1.7%). Trading was affected by renewed tensions in the peripheral countries of the Euro zone. Political crisis in Greece and fears of the country’s exit from the Euro area added volatility and pushed sales. US May Consumer Confidence data was up more than expected (77.8 ps) and helped market sentiment towards the end of the week.

Auto&Parts stocks were flat in the week (-0.4%). Pirelli (8.9€, -4.9%) saw some profit taking after the Q1’012 Results. Year-to-date performance is +36.7%. Analysts’ comments on the results were positive; Morgan Stanley, among others, considers the current stock price a very good entry-point for what is considered a top-pick in the sector.

Average consensus target price went up to 10.4€ with 96% of the coverage with a positive recommendation.

PEERS & MARKETS

The week definitely started with a downturn in the major European market (Milan -4.1%, London -2.1%, Frankfurt -2.6%, Paris -2.1%, Madrid -2.2%). Tensions over Spain’s debt (spread Bonos-Bund at 415 points) and the uncertain outcome of elections in Greece and France are making markets very volatile and encourage selling. The negative sentiment is also fuelled by U.S. macroeconomic data on new jobs and unemployment, which proved to be worse than expected.

Bearish attitude also in the Auto&Parts Industry (-4.7%), after the strong rebound earlier in the year (up +20.5% since January 1, 2012).

Pirelli closes the week at 9.355€ (+0.6%) against the trend of the sector and of the reference market. Over 5 million shares, the daily average of dealings. HSBC upgraded Pirelli stock to 15€ (from 12€), confirming its “Overweight” recommendation. The average Consensus Target Price, therefore, goes up to 10.3€ with 96% of analysts covering the stock giving positive recommendations.