Credit Suisse Upgrades Michelin Rating

Michelin were upgraded on 3 September to a rating of “outperform” by a Credit Suisse report. Margin stability and a sharp fall in oil prices have led analysts to the conclusion that the French manufacturer will continue its upward trajectory on the markets despite “volume and raw materials headwinds”. The brokerage believes that Michelin is “on track to deliver an 8.2 per cent margin in 2008 thanks to solid price and cost discipline.”

With this in mind, the report also raised the target price on Michelin shares from 40 euros to 58 euros, adding the caveat that “to justify value beyond this level we believe management needs to better explain restructuring cost savings.” Credit Suisse maintains its scepticism on the subject of Michelin’s long-term margin and growth targets.

Michelin reported on 30 July that the company had a greater H1 decline in operating income than expected, reducing its 2008 profit target accordingly, but keeping its 2010 objectives. On the morning of 3 September, shares in the company were up by over 3 per cent, trading at 50.65 euros at 0837 GMT.