KeyBanc Downgrades Goodyear Tire & Rubber (GT) to Hold, Cites Tariff Uncertainty

September 21, 2012 7:26 AM EDT
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Price: $27.19 -1.52%

Rating Summary:
    5 Buy, 4 Hold, 3 Sell

Rating Trend: Up Up

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    Up: 27 | Down: 39 | New: 27
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KeyBanc downgraded Goodyear Tire & Rubber (NYSE: GT) from Buy to Hold.

The firm cited: 1) the expiration of the Chinese tariff is creating a great deal of uncertainty among industry participants as to the ultimate impact on pricing and volumes, which is likely to weigh on tire stocks in the near term; 2) tire pricing is currently declining slightly more than we had previously thought, which will narrow the positive price/mix vs. raw material spread for CTB and GT in 4Q12; 3) while lower priced tire volumes will likely benefit from the expiration of the tariff, tire dealers and wholesalers appear likely to restrain mid-high price tire orders until prices decline further; 4) raw materials appear to have bottomed at what we believe are unsustainably low levels, which will reverse at some point, causing the price/mix vs. raw material spread to narrow further; and 5) stock prices have risen materially in recent months largely discounting an improving near-term earnings outlook, driven primarily by a substantial decline in raw materials, some degradation in tire pricing and relatively stable volumes.

For an analyst ratings summary and ratings history on Goodyear Tire & Rubber click here. For more ratings news on Goodyear Tire & Rubber click here.

Shares of Goodyear Tire & Rubber closed at $13.38 yesterday.

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