As anticipated in a previous article (click here to read) the break at the end of the week of the € 3.6 area has given wings to the title that now travels towards objectives which if achieved presuppose a rise from current levels of over 80% .
However, these bullish potentials are not reflected in the analysts’ recommendations. At present, in fact, the average consensus is Hold, to maintain, with an average target price that expresses an overvaluation of approximately 5%.
Other forms of valuation such as that based on earnings multiples and the Price to Book ratio also see the Pirelli share overvalued compared to current prices. Nor is the exception of fair value calculated using the discounted cash flow method. Even in this case, the stock is over 80% overrated.
How can the state of overvaluation be reconciled with the bullish potential we mentioned earlier? The word to the graphical and forecasting analysis.
Why is it worth investing in Pirelli stock on Ftse Mib?
Pirelli (MIL: PRC) closed the 4 June session in the € 4,207 area with a decrease of 0.45% compared to the previous session.
On the stock, weekly time frame, a bullish projection is underway that no longer has obstacles along the path that leads to the 1st price target in the € 4.55 area. The break of this levels in the weekly closing would open the doors to a continuation of the rise up to the 2nd price target in the € 6.05 area. The maximum extension is in the € 7.56 area with a bullish potential of over 80%.
A weekly closing of less than € 3.6 could at least lead to a retracement up to € 3.