Deutsche Bank Upgrades Goodyear Tire & Rubber (GT) to Buy
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Deutsche Bank upgraded Goodyear Tire & Rubber (NASDAQ: GT) from Hold to Buy with a price target of $37. Analyst Rod Lache highlighted the company's strong free cash flow.
"We believe that Goodyear is in a position to provide 3 compelling investment arguments at their upcoming CMD: 1) A credible forecast supporting continued 10%+ SOI growth; 2) A relatively defensive position (80% revenue from tire replacement; mix positives largely “pre determined”); and 3) GT appears poised for significantly increased cash payouts to equity shareholders. 90% of GT’s free cash flow has gone to debt or pension in the past 2 years. But going forward, almost all of the ~$1bn per year free cash flow may be directed to shareholders. It is this last point in particular that leads us to upgrade to buy, and raise our TP to $37 (8.5x our upwardly revised 2017 estimate)," said the analyst.
Shares of Goodyear Tire & Rubber closed at $29.73 yesterday.
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