Bernstein starts covering tyre makers, likes sector's pricing power

BRIDGESTONE

04/06/2024 07:21

** Bernstein starts coverage of tyre makers, saying the
sector is highly attractive due to high and expanding margins,
pricing power, and opportunities from sustainability,
particularly for the big players 
    ** "This industry has genuine ability to price ahead of
inflation, and tyre review data shows low cost competition is
actually retreating from key EV and premium markets" - Bernstein
    ** Premium tyres are heavily used in SUVs, luxury cars and
EVs, markets that are expected to grow, it adds 
    ** Its top pick is Michelin  MICP.PA  and it also likes
Bridgestone  5108.T , both rated "outperform", pointing to their
innovation capabilities which drive pricing power, and margins 
    ** At Pirelli  PIRC.MI  ("market-perform"), industry
tailwinds are better priced in, while its earnings quality is
lower than peers and there are questions around its governance,
Bernstein says
    ** Continental  CONG.DE  ("underperform") is struggling with
structural issues, with margins collapsing in its Automotive
business, the broker adds
    ** "Not all suppliers will die, but Continental scores
poorly on our framework for survival" - Bernstein 

  

 (Reporting by Olivier Sorgho)
 ((Olivier.Sorgho@thomsonreuters.com))