A sharp rise for Pirelli in the week 4 to 8 April 2011, returning to a three-year high of €6.5 (+3.8%, about 2pp higher than the Milan blue chip index). This price trend was supported by upgrades by Mediobanca (Overweight and TP at €7.2 from €6.9), Societe Generale (Neutral at €6.9 from €6.25) and Morgan Stanley (Overweight at €9 from Underweight at €6.6).
For Morgan Stanley in particular, Pirelli is the only share in the Auto & Parts sector to offer a high upside on its results: growth of 20% in EPS is forecast in 2011, and 21% in 2012.
The trend on the major international markets was also broadly positive (Milan +1.9%, London +0.8%, Paris +0.2%, Frankfurt +0.5%).
The BCE decision to raise the official interest rate by 25 points (to 1.25%) had a particularly positive effect on bank shares, which recorded growth of 2.2% over the week, and on the Euro, which reached a 15-month high of 1.4426 against the dollar. Industrial (Stoxx –1.4%) and Auto (-0.7%) shares, in contrast, were weak.
It should be noted that the continuing geopolitical tensions in the Middle East and Africa meant that oil reached a 32-month high during the week (with Brent at 124 dollars a barrel).
Categories: Peers & Markets