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.