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On Friday, Bernstein SocGen Group reaffirmed its Underperform rating on Pirelli & C . S.p.A. (BIT:PIRC:IM) (OTC: PLLIF), with a steady price target of EUR 4.60. The firm’s analysis highlighted Pirelli’s strong market position and popularity among analysts, noting that the company currently enjoys the highest percentage of buy ratings it has ever had since becoming a public entity. Despite this, Bernstein SocGen Group has not altered its stance since the downgrade in November, when they cautioned that while Pirelli had been executing well, the stock’s upside potential was limited and not sufficiently accounting for possible downside risks.
Pirelli concluded the fiscal year with a positive trajectory, demonstrating growth in volumes, price/mix, and margins. The fourth-quarter earnings before interest and taxes (EBIT) saw an 11% increase. Bernstein SocGen Group acknowledged Pirelli’s strong performance but also pointed out some concerns, such as the Q4 earnings beat being driven entirely by foreign exchange gains, a deceleration in price/mix, and a loss of market share in original equipment (OE) compared to competitors like Michelin (EPA:MICP).
The firm praised Pirelli as a high-quality company that has been successful in favorable market conditions, especially with robust demand for its high-margin products, such as replacement tires larger than 18 inches in Europe and the United States. Looking ahead to 2025, excluding potential disruptions from tariffs, Bernstein SocGen Group anticipates Pirelli to continue on a stable path with 1-2% volume growth, 2-3% price/mix improvement, and a gradual margin increase of approximately 30 basis points annually, leading to mid-single-digit EBIT growth. This forecast aligns with the current consensus.
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