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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 slightly up in the week from the 24th to the 28th of February, 2014 (Milan +0.2%, Frankfurt +0.4%, London -0.4%, Paris +0.6%, Madrid +0.4%). On a positive note, the EU revised its 2014 Eurozone GDP growth estimates: +1.2% yoy vs +1.1% forecasted in November; improved outlook for Germany (+1.8% vs +1.7%), France (+1% vs +0.9%) and Spain (+1% vs +0.5%), whereas Italy’s growth is expected down to +0.6% (+0.7% previously). European unemployment in January was in line with expectations at 12% (stable vs December), and the US purchasing manager confidence surprised on the upside. Volatility was up sharply towards the end of the week, as political tension kept rising in Ukraine causing today’s sell-off in equity markets.

Auto & Parts stocks were down in the week (-1% vs Stoxx 600 +0.6%), weighted down by large-cap VW (-6%): the shares factor in the dilutive impact of the preference shares issued to finance the acquisition of Scania (6%/7% dilution according to broker Cheuvreux). Moreover, investors reduced exposure to those stocks most exposed to the Russian market (Renault -2.5%, Nokian -4.9%).

Pirelli shares were up 0.6% in the week, closing at 12.6€ with an average daily trading volume of 2 million shares (-20% vs 4-week average). The deal reached with Bekaert (disposal of steel cord business and long term supply agreement) was already discounted by the market; sector analysts viewed the deal positively, as it increases Pirelli’s focus on Premium tyres, with higher profitability, it reduces exposure to a volatile business (steelcord is mainly a truck tyre component), and it has a positive impact on net debt. Consensus target price stood at 12.04€ with 74% of analysts advising to buy or hold the shares.


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PEERS & MARKETS

The main European stock markets were mixed in the week from the 17th to the 21st of February, 2014 (Milan -0.2%, London +2.6%, Frankfurt -0.1%, Paris +0.9%, Madrid -0.6%). On the macro data front, negative surprises came from the drop in German consumer confidence (February Zew index down for the second consecutive month) and from the contraction in Chinese manufacturing (February flash PMI). Good news were the US employment, with a drop in jobless claims, whereas the Fed minutes hinted at the possibility that interest rates might be hiked sooner than expected.

Auto & Parts stocks were up in the week (sector index +0.7%), now the best performing sector in 2014ytd with a return 3 times higher than the Stoxx 600 index (+7.6% vs +2.4%). Peugeot led gains following FY13 results and the capital increase agreement with the French State and Chinese partner Dongfeng Motors.

Pirelli shares closed the week stable at 12.53€ (-0.6%) with limited volumes: daily average shares traded at 1.7 million are 43% below the average for the last month. According to data published by Michelin, tyre market trends in January confirmed the rebound in the European Car replacement channel and the weakness in Brazilian OE. Consensus Target Price stood at 12.04€ with 74% of analysts recommending to Buy or Hold the shares.


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PEERS & MARKETS

The main European stock markets were up in the week from the 10th to the 14th of February, 2014 (Milan +3.8%, London +1.4%, Frankfurt +3.9%, Paris +2.6%), helped by the statement of recently appointed Fed Governor Janet Yellen: monetary policy will continue with progressive reduction in the bond buying program, should macro indicators progress as forecast. Positive news, moreover, came out of China, with January imports and exports data beating expectations (trade balance at 31.86$/mld vs 25.64$/mld in December), Germany (Q4 ’13 GDP +0.3% vs expectations of +0.1%) and France (GDP +0.3% vs +0.1%).

Auto & Parts stocks led the gains (sector index +6.5% vs Stoxx 600 +2.5%); Goldman Sachs confirmed its positive view on the sector, improving the outlook for new car registrations in Europe, now +6.4%, +5.8% and +3.1% in the three years from 2014 to 2016 (previous estimates were +3.2%, +4.7%, +2.9%); the broker prefers stocks with lower exposure to Emerging Markets volatility. Investors reacted positively, moreover, to better than expected Q4 results for Renault, Faurecia and Michelin.

Pirelli closed the week up 6.5% at 12.61€ with an average trading volume of 3.2 million shares per day; investor sentiment on tyre stocks is improving thanks to commentary provided during the FY13 reporting season: 2014 volumes should show moderate growth and price/mix vs raw materials should develop positively. In its sector update, GS reviewed its valuation on the stock (Sell, TP 10.6€) discounting a more cautious view on foreign exchange and tyre demand in South America. Consesus Target Price stood at 12.04€ with 74% of analysts advising to Buy or Hold the shares.


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