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(Bloomberg) — Goodyear Tire & Rubber Co. could be a winner from President Donald Trump’s tariffs on car imports as most of its US demand comes from domestic manufacturers and tires aren’t included in the planned levies, at least for now, according to Deutsche Bank, which upgraded the tire seller to buy from hold.
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“Any negative impact on new vehicle sales should be tempered by a significantly higher mix of better margin, replacement tires,” writes analyst Edison Yu, who resumed coverage on Goodyear in December. “All in, there remain risks on execution, but we believe the company is well situated operationally to outperform with current valuation at trough levels.”
Shares rose 5.1% on Monday but are down more than 30% from a peak hit almost a year ago. Peers AutoZone Inc. and O’Reilly Automotive Inc. also ended the day higher.
The bullishness comes after Goodyear’s steady progress in its cost cutting program, with Deutsche Bank noting that the company has also closed the sale of its off-the-road tire business, announced the sale of its Dunlop intellectual property and reiterated the expectation that its chemicals divestiture should be complete before the end of this calendar year.
Yu sees future gains ahead for the stock. He maintains his $13 price target, which implies a 41% jump from where the shares closed on Monday and ranks among the highest on Wall Street. The average 12-month target is about $12. Goodyear is currently trading at $9.24.
The stock also has five buys, five holds and zero sell ratings.
“Our conversations with the company have given further confidence that it has the necessary traction to achieve its targeted $1.5 billion in cost savings and margin improvement by the end of 2026,” Yu writes.
(Updates with closing prices throughout)
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