Merrill Lynch Upgrades Michelin
Merrill Lynch’s upgrade of Michelin stock due to declining oil prices and prospective replacement segment sales growth led to the company’s largest rise in six weeks of Paris trading. The stock gained up to five per cent (a gain of 2.23 euros, leaving stocks at a high of 46.59 euros) today, while the latest figures at 15:37 show a 4.7 per cent rise.
The analyst’s report suggests that the decrease in oil prices will continue to support a recovery for Michelin’s stock as revenues rise following decreased raw materials outlay. Merrill’s London-based analyst Thomas Besson raised his recommendation to “buy” from “neutral”, which prompted the increase in activity.
Michelin has twice scaled down earnings forecasts this year following the increase in oil prices. Having seen oil come down 25 per cent from its July high, investors will expect these forecasts to hold a steadily brighter outlook. Today’s market activities show once again the strength of the inevitable ties between tyremakers’ shares and oil costs.
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