STOCKS NEWS EUROPE-Fiat outperforms sector after Chrysler

Shares in Italian auto maker Fiat (FIA.MI) are outperforming the sector .SXAP, up 0.1 percent after the presentation of Chrysler's 5-year business plan which analysts describe as aggressive. The DJ STOXX European auto index .SXAP is down 1.7 percent.

On Wednesday Chrysler, 20 percent owned by Fiat, offered an ambitious outlook, saying it would more than double sales, roll out a dozen new models built on Fiat platforms and pay back debt to U.S. taxpayers over the next five years.

Chrysler's financial projections of revenues of $67.5 billion and an operating profit of $5 billion by 2014 are significantly more positive than Morgan Stanley's estimates.

"We believe the market grossly under-estimates the value of Chrysler to Fiat - our top pick in Europe with over 60 percent upside to our 18 euro target," the broker says in a note.

Even a partial achievement of targets can make an IPO of Chrysler likely by early 2011, it adds.

JPMorgan says if sales targets are achieved it would be a remarkable turnaround for Chrysler. "However we do not think they are conservative targets," it says in a note.

The broker says if Chrysler hits its targets the value to Fiat could be worth an extra 4.5 euros per share, with room for a 2.5 euros per share upside by 2011.

But it says if the sales in Chrysler are not picking up, the "market may take a dimmer view of Chrysler's prospects, which would suggest as much as 10-15 percent downside to Fiat shares."

Credit Suisse sees the plan as highly agressive but while significant cash risks to Fiat investors remain "we expect a sharply recovering US market to prompt investors to take a more optimistic view on the asset."

Reuters Messaging rm://stephen.jewkes.reuters.com@reuters.net