Sales were focussed on the Auto & Parts sector in the week 8-12 February. The markets reflect the uncertainty in the sector about 2010 (trend in new vehicle registrations in Europe, increase in raw material costs). Pirelli closed the week at €0.377, a fall of 3.7%, more modest than those reported by its peers:  Continental -12%, Michelin -6%.
Pirelli RE closed 9.9% down.
 

A bad week for European stock markets (-4.9% Milan, -2.5% London, -3.1% Frankfurt, -4.7% Paris), burdened by fears of the high indebtedness of Spain, Greece and Portugal, and about the strength of the euro.
Sales mainly involved the banking sector (-6.4% the European reference index), the auto& parts sector (-4.5%) and the construction industry (-4.3%).
Pirelli closed the week at € 0.391, a fall of 7.6%. Its peers also closed down, with Continental falling by 6% and Micheln and Nokian by 5%. During the week, Kepler upgraded its recommendation for Pirelli &C from Hold to Buy, with target prices increasing from € 0.45 to € 0.47. The upside is driven by the reduction in the weight of holding costs on NAV, in the light of the company’s declared commitment to the process of focussing on its industrial activities, and the positive expectations for its tyre business in 1H 2010. The Consensus Target price is € 0.486 on coverage of 18 brokers, 76%  BUY, 24% Hold.
Pirelli RE closed 7.7% down.

Pirelli was one of the best-performing Auto & Parts shares in the week 25-29 January 2010, outperforming not only the European reference index (+3.7pp), but also the Italian blue chip index (+3.8 pp), closing at €0.423: a 1% rise in a week characterised by extensive selling in all sectors.
During the week Intermonte revised its valuation of the shares (TP to €0.50 from €0.46), confirming its Outperform recommendation. According to this broker, the market is underestimating the trend of the tyre business for 2010 and 2011,  not fully appreciating the greater focus on the core business and the separation of Pirelli RE, which will take place by the end of 2010.
A poor week for Pirelli RE: the share price closed at  € 0.457 (-7.7%).