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Pirelli: UBS a buyer after results

(CercleFinance.com) - UBS has confirmed its buy rating on the stock of Italian tyre maker Pirelli, welcoming the group's full-year results, even though they do not seem to impress the market.

Analysts point to the cleansing of the group's balance sheet and maintain their 12-month target price at 8.5 euros for the share.

Admittedly, sales of 5.35 billion euros (+7.6%) have, UBS says, slightly missed the consensus, due to FX factors and volumes. However, the group's product mix, which has been driven by high-margin tyres, was better than analysts were expecting. At 17.3%, its operating margin is also "slightly better" than expected.

Finally, UBS insists on the group's balance sheet, which is improving rapidly: Pirelli ended 2017 with net debt of 3.2 billion euros, bringing its net debt/EBITDA from 4.5x at the end of 2016 to 2.7x a year later, while the consensus was expecting 3x.

Pirelli also intends to continue along these lines, reducing this ratio towards 2.3x this year, while the consensus expected 2.5x.

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