Goldman Sachs Upgrades Goodyear Tire & Rubber (GT) to Buy, Tailwinds to Boosts Op Income

Goldman Sachs upgraded Goodyear Tire & Rubber (NYSE: GT) from Neutral to Buy with a price target of $17.00 (from $14.00), saying they see near-term tailwinds to boost operating income.

The firm sees near term benefits from an inflection of replacement demand in North
America and lower raw material costs that favorably affect the P&L from 4Q2012 onward due to GT’s use of FIFO accounting.

"Even though we see some risk to the overall pricing environment, we expect the
price/mix net of raw material costs to remain positive for 2013 and 2014," the analyst said. This could drive upside to Goodyear's own SOI target of $1.6bn for 2013 and to consensus estimates, the firm notes.

Goldman is 6% and 12% above the Street on our 2H2012 and 2013 estimates.

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 $11.99 yesterday.

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