The main European stock markets were down in the week from the 9th to the 13th of April 2012 (Milan -5.8%, London -0.9%, Frankfurt -3.0%, Paris -3.8%). Trading was affected by the renewed worries around the sovereign debt of Southern European countries and the global economic trend (Chinese GDP in the first quarter of the year and US consumer sentiment data were worse than expected).

Auto & Parts stocks (-3.8% in the week) were affected by weak European car registration data, showing a 9% decline over last year.

Pirelli stock showed a different trend, closing the week flat at 8.77€, with an average daily volume of 4.3 million shares.

The main European stock markets were down in the week from the 26th to the 30th of March, 2012 (Milan -3.1%, London -1.5%, Frankfurt -0.7%, Paris -1.5%, Madrid -3.3%). The decision to increase the European rescue fund to € 800 bln (partially expected) was not enough to balance the renewed worries surrounding the Eurozone sovereign debt.

Pirelli closes the week at €8.92 (+1.1%, with daily average volumes of 4.4 mln), outperforming the Auto & Parts index (-0.8%). In the week, broker Société Générale upped the valuation of the stock, setting the Price Target at €10.2 (from €8.20), while confirming the “Buy” rating. According to the analyst, FY 2011 results provided support to the positioning of Pirelli in the Premium segment and in Latin America.

The first quarter of 2012 marks a positive performance for Pirelli, with the stock up 37.1%, better than the European Auto & Parts index (27.8%) and Milan (+5.9%).

European stock markets were down in the week from 19th to 23d March 2012 (-3.5% Milan, London -1.9%, -2.3% Frankfurt, Paris -3.3%). Market sentiment was affected by the renewed fears of a weakening Chinese economy.

An increase in fuel prices operated by the government in Beijing (the second in the last 6 weeks) plus a warning on estimates of the auto market by Chinese producers’ association (probably less than 5% growth), weighted on the Auto&Parts sector, which was down by 4.7% in Europe.

Pirelli closed the week at € 8.83 (-1.8%) with an average daily traded volumes of approximately 5 million. Goldman Sachs (Buy, € 14.3) and Citi (Buy, TP € 10.5 from € 8.5) renewed the positive view on the stock indicating Pirelli as one of the few companies in the sector with room for upside in spite of the recent rally. The consensus target price now stands at € 9.85 with 91% of coverage with positive recommendations.

The week from 12th to 16th March was positive for the main European stock markets (+3.7% Milan, London +1.3%, +4.0% Frankfurt, Paris +3.1%) driven upward by the release of the first tranche of aid to Greece from the EU and the positive macroeconomic newsflow. The Chairman of the Fed confirmed the willingness to keep interest rates low until 2014 despite the progress observed in the labor market and the better-than-expected US leading macroeconomic indicators (employment, consumer confidence, industrial production).

Another good performance of the Auto & Parts sector with an increase of +2.5% along with Industrials (+4.0%) and Banks (+5.3%).

Pirelli, after the publication of the annual results, ended the week up by +15.0% at 8.99€ with an average daily traded volumes of more than 12 million pieces, about three times higher than last quarter.

According to analysts reports, Pirelli closes the year with a “good set of results” in line with expectations. The upward revision of guidance on profitability surprised the market by offering room for upside to consensus.  The new targets, according to analysts, adds credibility to the business plan 2012-2014.

10 brokers have revised upward the valuation on the stock (TP) by an average of EUR +1.2. The consensus Target Price is now at € 9.70 with over 90% of coverage with positive recommendations.

European stock markets were mixed in the week from the 20th to the 24th of February (Milan -0.4%, London +0.5%, Frankfurt +0.2%, Paris +0.8%), on lower European GDP growth forecasts (GDP -0.3%, inflation 2.1%) and another Greece sovereign debt rating downgrade by Fitch (to C from CCC). Equities trading was also negatively affected by disappointing European PMI data, down to 49.7, signaling a contraction in economic activity (expectations of 50.8).

Auto & Parts stocks performed in line with the overall market (European sector index down 0.4%).

Tyre stocks recorded losses in the week: Pirelli was down 2.9% at €7.925, similarly to Michelin (-3%) and Nokian (-1%).

Positive week for the main European stock markets (Milan +1.1%, London +0.9%, Frankfurt +2.3%, Paris +2%) the one from the 13th to 17th of February. Markets were positively influenced by the expectation of a close agreement between the European Union and Greece.
European Auto & Parts sector was positive (+2.9% the sector index) amplifying the positive macroeconomic news flow.
Pirelli closed the week at €8.16 (+8.9%), outperforming the sector (+6.0pp) and its main peers (+4.2pp vs Continental, +7.7pp vs Michelin, +6.3pp vs Nokian). The stock benefited from an upgrade by Intermonte (Overweight to Buy) with a Target Price of €11 (€9.0 the previous valuation).

European stock markets were down in the week from the 6th to the 10th of February 2012 (Milan -0.5%, London -0.8%, Paris -1.6%, Frankfurt -1.1%). Market sentiment was affected by the negotiations between European authorities and the Greek government concerning the austerity measures needed to obtain the €130bln aid package. Moreover, US consumer sentiment data disappointed: the benchmark index was down to 72.5 in mid February, compared with the end-of-January reading of 75 and expectations of 75.5. The index remains at historically low levels (before the current crisis, US consumer sentiment index was at approximately 87 points). The central bankers of England and Europe left benchmark indeces unchanged (0.5% and 1% respectively) and increased the purchase of Sterling denominated bonds (Bank of England).

The European Auto & Parts stock index was flat in the week. Chinese car market data was positive for German OEMs, which recorded year-on-year gains in January to the tune of 20% to 30%.

Pirelli shares were slightly up in the week (+0.1%), closing at € 7.49 with an average daily volume of ca. 3.5 million shares. According to HSBC’s latest report, Pirelli is best positioned to make up for a reduction in volumes in the industry thanks to its increasing exposure to the Premium segment, which benefits the mix. The broker confirms its view on the stock (Overweight, Target Price increased to €9 from €8.5) based on the company’s good fondamentals and the superior growth profile in the sector.

During the week, Michelin and Nokian published their FY 2011 results and guided for an improved profitability in 2012. According to Goldman Sachs, the read-across for Pirelli is positive, given its strong pricing power provided by the Premium positioning and the greater proportion, compared to its peers, of raw material cost absorbed in 2011 (3-monthslag vs 6-months).

Key european stock market indices were mixed in the week from the 23rd to the 27th of January, 2012 (Milan +2%, London +0.1%, Frankfurt +1.7%, Paris -0.1%). According to the IMF, world GDP growth in 2012 will be slower than anticipated (+3.3% vs 4% previously), and Eurozone GDP will contract by 0.5%. The US Federal Reserve stated the intention to keep benchmark interest rates at the current low levels until 2014, and added that other stimulus measures are still on the table. In the bond market, the spread between Italian BTPs and German Bunds narrowed by approx. 100bps, after the successful outcome of Italian sovereign debt auctions (3y Ctz yield down to 3.76% from 4.85%).

Within the Auto & Parts sector (European index up 1.1% vs Stoxx 600 -0.2%), Auto OEMs and Parts producers outperformed, thanks to positive US durable goods data. Tyre stocks were weak, including Pirelli which ended the week down 1.9% at €7.08, in line with peers. According to brokers Exane, Equita and Intermonte, Pirelli will hit 2011 profitability targets notwithstanding the softness in Q4 volumes; attention now turns, according to Intermonte, to H1 2012 sales which should be sustained by the low level of summer tyre stock held by dealers.

European stock markets advanced in the week from the 16th to the 20th of January 2012 (Milan +4.1%, London +1.6%, Frankfurt +4.3%, Paris +3.9%). Investors reacted positively to the newsflow around the Euro sovereign debt crisis, such as the strenghtening of the EFSF (worth $500 bln), the possible conclusion of the negotiations between Greece and private sector creditors and the increase in Euro-area bond purchases by the ECB in the secondary market (€3.7 bln). Over the week, the spread between Italian BTPs and German Bunds narrowed significantly.

Auto & Parts stocks were up strongly: sector index Stoxx posted a +8.9% increase over the week, as broker Goldman Sachs affirmed the attractiveness of the sector while upgrading Pirelli to Buy rating and increasing its Price Objective to €14.3 (from €9.4), making it the highest in the coverage universe. Pirelli closed the week up +9.6% at €7.22

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The banking sector (Stoxx banks -2.7%), recorded the worst weekly performance discounting the possibility of the need for new resources to address the crisis in the eurozone.

Good performance for Auto&Parts (+6.4% the Stoxx index) thanks to the December car registrations data, particularly in Germany and Brazil.

Pirelli closed the week at € 6.7 with an increase of 3.2%. Cheuvreux included Pirelli stock among the 7 Italian Top Picks in 2012 while Merrill Lynch has confirmed the view on the stock and upgraded the TP to € 6.5 from € 5.8.