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