Jefferies names Michelin its top pick in European tyre sector

Continental AG

25/11/2025 07:51

** Jefferies keeps French tyre maker Michelin MICP.PA as its top pick in the European tyre sector, citing scope for a significant earnings recovery by 2026

** It maintains its "buy" rating with a 38-euro ($43.79) PT, as it expects volume recovery, fixed cost reabsorption, and a better mix to drive earnings after a cyclical soft patch in 2025

** Jefferies does not think the company's brand equity and pricing power are broken and notes the shares trade "at a discount to peers despite offering higher growth"

** It cuts Pirelli PIRC.MI to "hold" from "buy", saying the Italian tyre makers' consensus into 2026 looks broadly fair with only limited upside and few near-term catalysts ahead of the industrial plan after Q4

** Jefferies sees Pirelli's 2026 revenue at 6.7–6.9 billion euros with margins around 16.2%, and lowers its price target to 6.50 euros from 7.40 euros, while noting that over time "the stock has room to re-rate to a premium position amongst peers"

    ** It upgrades German automotive supplier Continental CONG.DE back to "buy" from "hold" and raises its PT by c. 7% to 75 euros, saying 2026 consensus already reflects guidance on revenue of 18–19.5 billion euros and margins of 11.5–12.5%, with potential upside from its ContiTech rubber and plastics division sale

($1 = 0.8678 euros)

 (Reporting by Laura Contemori)

 ((Laura.contemori@thomsonreuters.com))