Bernstein sees attractive 2026 returns for European tyre makers

Continental AG

05/01/2026 12:03

** In a note on European tyre makers, Bernstein sees the sector offering attractive 2026 margins and cash returns, citing peaked imports after last year's tariffs' headwinds, and high local-for-local production

** It maintains Michelin  MICP.PA as its top pick, rating it as "outperform", expecting margins above consensus and considerable cash returns, driven by debt levels at a >20-year low

** It also upgrades Italy's Pirelli PIRC.MI to "outperform", seeing revenue and margin growth coming from sector-specific tailwinds in 2026, and cash returns to expand after forecast Sinochem sale by March, while saying the stock currently trades at "significant discount"

** The brokerage upgrades Continental  CONG.DE to "market perform", after a "very strong" recent performance in tyre business and a fair valuation, although it adds the ContiTech sale brings downside risks given the asset's size

COMPANY
RATING
OLD RATING
PT
OLD PT
Michelin MICP.PA
Outperform
Outperform
€38
€36
Pirelli PIRC.MI
Outperform
Market perform
€7
€5.20
Bridgestone 5108.T
Outperform
Outperform
¥4,300
¥7,700
Continental CONG.DE
Market perform
Underperform
€66
€50

(Reporting by Mirko Miorelli)

((Mirko.Miorelli@thomsonreuters.com))