Morgan Stanley Raises Price Target on Goodyear Tire (GT); Reiterates Underperform
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Morgan Stanley reiterated an Underweight rating on Goodyear Tire & Rubber (NASDAQ: GT), and raised the price target to $24.00 (from $20.00), as headwinds continue. Through 2020, GT expects incremental demand in the ≥17" segment to be in
excess of incremental supply in the Americas and in Asia and to be very closely matched in EMEA. However, GT's expectations are based on the ≥17" segment growing at 15% CAGR through 2020, more than double the 7% CAGR expectations of its Tier 1 peer, Michelin.
Analyst Paresh Jain commented, "The favorable shift in vehicle mix to light trucks in recent years, particularly in North America, is a positive for GT as it is expected to drive a favorable shift in tire mix. However, we believe the commoditized nature of the product may lead to volume growth falling short of management expectations, making any pricing/mix benefit to margins difficult to sustain."
Shares of Goodyear Tire & Rubber closed at $29.92 yesterday.
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