Analysts: Pirelli target upgrade a big surprise

While pleased that Pirelli’s figures were “in line” with expectations, financial analysts have reported their surprise at the Italian-based tyre manufacturers’ decision to raise its targets for 2012. According to advice sent out by Morgan Stanley the upgrade news is “a big surprise so soon after the investor day in the fourth quarter.” They expect target upgrade in the region of 8 to 10 per cent and immediately issued the succinct advice “buy”.

“What surprised us positively was 2012 guidance: it was increased to greater than 12 per cent margin albeit on slightly lower targeted revenue,” the advice explained. This, they continued, still implies a pre tax profit floor (EBIT) of 792 million euros compared with the market consensus of 732 million, which is at least an 8 per cent upgrade.

Earlier the same analysts had written that they expected Pirelli’s figures to be in line: “We believe Pirelli will deliver 139 million euros of reported EBIT, a touch higher than the street and Pirelli’s targets.” They added: “We think it is still realistic to expect a slower first half compared with the second half of 2012” – something that in this case certainly appears to be on the money.