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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 week from July 15 to 19 was a positive one for the major European Markets following the good macroeconomic newsflow (Milan +4.5%, London +1.3%, Frankfurt +1.4%, +1.8% Paris, Madrid +1.3%). In the semi-annual testimony to the Congress Fed Chairman Bernanke reassured markets on the continuation of a highly accommodative economic policy: a slowdown in liquidity injections will take place only in case of strong acceleration in the U.S. economy. Positive signals also came from the European Central Bank that were expanding the list of assets accepted as a collateral to make it easier to purchase bonds from countries in difficulty.

Another positive week for European Auto&Parts sector (+2.6%) pending the full start of the reporting season for the second quarter 2013. The index ended the week with the best sector performance YTD: +17.7%, +10.5 percentage points versus the Stoxx 600. European tyre stocks was also up after positive data on market in June that confirmed the good performance of Emerging Markets and an ongoing stabilization in Europe.

Pirelli ended the week at € 9.54, up 10.9% compared to last week with an average daily trading volume of about 3.3 million pieces. In addition to the positive indications that emerged from the data of the tire market in June (in particular the strong performance of Brazil), the stock’s performance reflected the upgrade by JP Morgan to Overweight (from Neutral) and the increase of target price to 12 € (9.5 € ).

The consensus target price therefore stands at € 9.70 with 45% coverage of the recommendation with “Buy”.


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PEERS & MARKETS

The main European stock markets were up in the week from the 1st to the 5th of July 2013 (London +2.6%, Frankfurt -1.9%, Paris +0.4%, Madrid +1.4%, Milano +1.9%), supported by the central bankers of Europe and England pledging to keep interest rates at the current low levels. Positive news on the real economy came from the United States, where data from the manufacturing and the construction sectors surprised on the upside.

Auto & Parts stocks advanced in line with the overall market (sector index +2% during the week), thanks to the outperformance of French OEMs: according to Goldman Sachs, European light vehicle production should pick up in the third quarter on the back of improving consumer confidence, as confirmed by the reduction of stock witnessed in the distribution channels.

Pirelli closed the week up 0.7% at 8.96€ with an average daily traded volume of 1.7 million shares. In an update report, broker UBS confirmed its positive view on the stock (rating BUY) and improved the valuation to 12€ (+2€). According to the analyst, Pirelli’s cash flow generation potential is particularly attractive, given the positive outlook of the Truck business in South America, the expected reduction in capital expenditures as well as the improvement in net working capital management.
Average Target Price stood at €9.55 (+7% upside on Friday’s closing price), with 83% of analysts advising to Buy or Hold the stock.

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PEERS & MARKETS

Major international stock markets were up in the week from April 22 to 26 (Milan +5.1%, London +2.2%, Frankfurt +4.8%, Paris +4.3%, +4.8% 9 Madrid). After the macroeconomic data from Germany in April (PMI at 47.9 points, below the consensus and the critical threshold of 50 points; Ifo economic activity down to 104.4 vs 106.2 pts estimated) markets relied on a cut of official rates by ECB to support economy (expected May 2nd a decrease to 0.5% from the current 0.75%).

By sector, purchases was focused on Auto & Parts stocks (+7.3% the Stoxx Auto Index) following the beginning of the reporting season. After the publishing of 1st quarter data that showed the weakness of demand, traders are betting on a trend of improvement in the coming quarters. This hypothesis was validated by early indications from the Industry: truck recovery in orders in March, general automotive sector re-stocking, tyre recovery in sales for the month of April.

Pirelli ended the week at € 7.68 (+4.3%) with an average daily trading volume of about 2 million.

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