Analysts on Pirelli results: ‘No warning in sight’

While seeking to allay fears that Pirelli will miss its targets when the Italian-based tyre manufacturer releases its second quarter figures on Thursday, financial analysts have suggested that Pirelli shares are overweight and that a price correction is “overdue.”

Commenting in an investor’s note published 24 July, Morgan Stanley analysts wrote that they expect Pirelli to outperform market consensus expectations by around 5 per cent and to reiterate full-year profit forecasts of greater than 800 million euros.

“Share price development in the last few weeks suggests the market lost faith in Pirelli’s ability to meet its targets. We disagree and believe the company will not disappoint in the second quarter and reiterate its targets with confidence. We do expect a downgrade to full-year volume guidance (from -1/2 per cent to -3/4 per cent) due to weaker than expected non-premium segment, but we believe intact price/mix growth (guidance 11/12 per cent) along with higher cost savings and lower raw material prices will more than offset the volume disappointment.”

According to the market watchers, expected headwinds are said to include a 4 million euro loss on a strike at Pirelli’s truck tyre plant in Egypt and 12 million euros of restructuring.