Goodyear Tire & Rubber Co. could be a relative winner from President Donald Trump’s announced tariffs on car imports as most of its U.S. demand is from domestic manufacturers and tires aren’t included in the planned levies, at least for now, according to Deutsche Bank, which upgraded the tire seller to buy from hold.
Read More: Trump Says He Hopes New Tariffs Send Buyers to American Cars
“Any negative impact on new vehicle sales should be tempered by a significantly higher mix of better margin, replacement tires,” writes analyst Edison Yu, who resumed coverage on Goodyear in December. “All in, there remain risks on execution, but we believe the company is well situated operationally to outperform with current valuation at trough levels.”
Shares rose as much as 3.3% on Monday but are down more than 30% from a peak hit almost a year ago. Peers AutoZone Inc. and O’Reilly Automotive Inc. are also trading higher Monday.
The bullishness comes after Goodyear’s steady progress in its cost cutting program, with Deutsche Bank noting that the company has also closed the sale of its off-the-road tire business, announced the sale of its Dunlop intellectual property and reiterated the expectation that its chemicals divestiture should be complete before the end of this calendar year.
Yu sees future gains ahead for the stock. He maintains his $13 price target, which implies a nearly 50% jump from where the shares closed on Friday and ranks among the highest on Wall Street. The average 12-month target is about $12. Goodyear is currently trading at $8.95.
The stock also has five buys, five holds and zero sell ratings.
“Our conversations with the company have given further confidence that it has the necessary traction to achieve its targeted $1.5 billion in cost savings and margin improvement by the end of 2026,” Yu writes.
