Deutsche Bank Upgrades Cooper Tire & Rubber (CTB) to Buy, Buyers Despite Expiring U.S. Tariffs

September 24, 2012 6:57 AM EDT Send to a Friend
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Price: $30.39 +0.33%

Rating Summary:
    3 Buy, 4 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 28 | New: 14
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Deutsche Bank upgraded Cooper Tire & Rubber (NYSE: CTB) from Hold to Buy with a price target of $25.00 saying they are buyers despite U.S. tariffs expiring.

"In anticipation of expiring tariffs, we have been speaking to manufacturers, dealers, and wholesalers. Our findings were encouraging, leaving us more bullish on the outlook for both Cooper Tire and Goodyear Tire than we had been anticipating. We're upgrading Cooper Tire to Buy, and reiterating our Buy recommendation on Goodyear (NYSE: GT).

The firm analysis of Chinese import pricing data suggests that (ex-tariff) pricing for Chinese tires has dramatically lagged the rest of the market (the average price of a Chinese tire import has risen by $3.85, to $34.12 on a wholesale basis, since August 2009; including all applicable tariffs, Chinese tires have risen by $12.53 to $41.01; this compares with an average price increase for all U.S. tire imports of $16.53, to $57.68). On a wholesale basis, ex tariffs, Chinese tire manufacturers' prices have also dramatically lagged raw material cost inflation ($15/tire since August 2009 for the average tire maker). "Consequently, we do not see scope for dramatic price declines," the analyst notes.

NOTE: Shares of CTB fell over 9 percent and GT fell 5 on Friday following a downgrade from KeyBanc on uncertainty ahead of the tariff expiration.

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

Shares of Cooper Tire & Rubber closed at $19.94 yesterday.


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