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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 of July 18th has been a positive one for major international markets (Milan +5.5%, London +1.6%, Paris -0.7%, Frankfurt +1.5%). After starting with a strong downswing, listings benefitted from the EU decision to relaunch the new bailout plan for Greece, by also involving private financial institutions.

Strong buybacks in the banking industry posted the best European performance: +5.7%, the reference Stoxx.

Sales in the tyre Industry: June and second quarter market data marked a slowdown in sales volumes compared to the first quarter of 2011. Major stocks underwent a downturn: Continental -3.5%, Nokian -3.2%, Michelin -2.8%. Pirelli, the best equity in the industry from the beginning of the year, closed the week at 7.25€ (-5.3%). Pirelli shares were upgraded by Exane, whose rating went from Neutral to Buy and a 9.7€ TP, and by Centrobanca, Buy and 9.5€ TP. Merrill Lynch took another view and started buying Pirelli when it was rated Underperform, with a 7€ Target Price. According to the latter broker, Pirelli overperformed the industry and its main peers in the last two years, because of an “appealing restructuring story” and a sound “earning generation”. The company can also count upon a strong brand, an efficient cost structure, robust pricing power and “an experienced management team”. The broker’s view of 2011-13 plan targets is again different: the growing competition in LatAM, as well as in Europe, could hinder the company’s ability to increase its profitability.

Pirelli average consensus Target Price is of 8.54€ with 96% of brokers buying the security at Buy rating.



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PEERS & MARKETS

The week 13 to 17 June was characterised by ups and downs on the main international markets (Milan -0.1%, London -0.9%, Frankfurt +1.3%, Paris +0.5%) with market focused on Greek debt.

Pirelli, in counter-trend with respect to the main peers and Piazza Affari (Milan Stock Echange -0.1%) closed at 6.76€, a rise of 1.5% with an average trading volume of 3 million per day.

During the week (14 June) Intermonte brought Target Price to 10€ per share (8.5€ the previous TP), the highest value ever assigned until now: the focus on premium, the price policy and a geographical positioning more open towards emerging markets – in particular in the Truck sector – will allow Pirelli to reach a profitability in line with Continental’s (with a forecast of 14% for Ebit margin in 2015). Similar drivers also brought Morgan Stanley (16 June) to confirm its strong recommendation to buy the stock(Buy, TP 9€).

The consensus Target Price was 8.22€, 96% the Buy percentage on a coverage of 22 analysts.

Note the publication of the figures on the tyre market for May (http://www.pirelli.com/web/investors/tyre_markets_trend/default.page) which underline a positive trend in the demand in Mercosur and Europe, an improvement with respect to April’s figures.

Categories: Peers & Markets


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