Investing.com - Rally cyclic stocks in Europe last Thursday moved from a dead point, supported by hopes that the key American export market will completely open faster than it was previously assumed that it comes back to still uneven recovery in the domestic market.
The DAX index in Germany reached a record maximum at the beginning of the day, after which it decreased slightly - to 0.8% to 05:30 in the morning (10:30 GRINVICH) at the auction in Europe. The FTSE MIB index also rose by 0.9%, ignoring the new tightening of quarantine in several regions as a result of the growth of the number of COVID-19 diseases.
It was largely caused by optimism about the automotive sector against the background of the strong initial income of Stellantis, the holding company created as a result of the Merge of Peugeot and Fiat, as well as the new UBS analyst report (NYSE: UBS) on a sharp increase in the approximate price of Volkswagen shares (DE: VOWG) as a sign of the recognition of the company's progress in the transition to the production of electric vehicles.
By 05:30 am East time (11:30, Greenwich), Stellantis shares (NYSE: STLA) rose by 2.4% - the highest level since October 2019, when the merger was not even thought about the pandemic. The group reported strong results at the end of 2020 and predicts the receipt of an operating margin in the amount of 7.5% in 2021.
Meanwhile, VOLKSWAGEN preferred shares rose by 4.5% to 184.93 euros, the highest level since January last year. However, the price is still a discount by almost 40% compared with the new approximate price of UBS for 12 months in 300 euros. Analyst Patrick Hammel said in a research note that it underestimated the potential VW, especially with respect to its model ID 3.
Such revisions are more reminiscent of Wall Street analysts, which lead their forecasts for TESLA (NASDAQ: TSLA) in accordance with the "star" expectations of retail investors. However, Tesla trades more than 1100 times higher compared to last year's profit, while Volkswagen trades less than 12 times higher compared to the closing price of Tuesday. Stellantis expects that this year the sales of its cars in Europe will grow by 10% compared with 8% in North America and 5% in China.
Not only VW slowly adapts to this trend. UBS also raised Renault (PA: RENA) stock rating. IContinental (DE: CONG) to "Hold". Renault shares rose 5.2%, and Continental - by 5.1%.
Author Jeffrey Smith
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