The main European stock markets were down in the week from the 22nd to the 26th of September, 2014 (Milan -0.8%, London -2.8%, Frankfurt -3.2%, Paris -1.5%), following disappointing manufacturing data in– modest growth in Europe (index at 50.6 vs 50.7 in August) and Germany (50.3 vs 51.4 in August) – and commentary by Chinese finance minister ruling out “major policy adjustments” to stimulate economic growth, despite recent signs of weakness and contrary to investor’s expectations.
Auto & parts stocks were down by more than 4 percentage points (European index -4.3%, Stoxx 600 -1.8%). Besides concerns of a slowdown in the Chinese economy, investors took a more cautious approach in the short term given the developments of the truck sector (2014 outlook downgrade by an important player, expecting Market contraction in Europe, Russia and Brazil) and the reduction in the European car replacement tyre market (-2% yoy in August).
Pirelli shares closed the week at 10.90€ (-7%), performing in line with tyre peers. Average daily volume of shares traded was 2.9 million, against a 3-month average of 2 million. Broker Credit Suisse published an update report on the stock, confirming the “Overweight” rating and upping the Target Price to 15€ (+0.5€); according to the analysts, positives include the solid volume and price/mix trend as well as management’s execution of the Premium strategy. Consensus target price is at 13.06€ with more than 85% of analysts recommending to “Buy” or “Hold” the shares.