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On Thursday, JPMorgan resumed coverage on Goodyear Tire & Rubber Company (NASDAQ:GT) with an Overweight rating and a price target of $17. The firm’s analyst cited several factors for the positive outlook, including Goodyear’s improving execution, debt reduction, and a focus on operational efficiency. The company is also positioned to benefit from Section 232 tariffs, which could advantage domestic tire manufacturers.
The analyst highlighted that Goodyear sources a mere 12% of its tires sold in the U.S. from countries affected by these tariffs, compared to over 50% for the industry. This positioning could lead to relative pricing and market share benefits for Goodyear. Additionally, the Goodyear Forward profit improvement initiatives, mostly related to restructuring savings, are expected to continue boosting earnings.
The restructuring efforts are progressing better than anticipated, with costs coming in lower than expected. This, combined with a strategy to sell non-core assets, is accelerating the debt reduction process. The sale of these assets is not only aimed at strengthening the balance sheet but also potentially unlocking sum-of-parts value. This is particularly crucial given Goodyear’s debt-to-equity ratio of 1.83 and relatively low price-to-book ratio of 0.61. For deeper insights into Goodyear’s financial health and additional ProTips, investors can access the comprehensive research report available on InvestingPro.
The analyst also suggested that Goodyear’s management could create a feedback loop of improved execution leading to higher earnings and cash flow, which in turn could further reduce debt. This cycle is supported by the management’s ability to invest more time, focus, and financial resources into the company’s core operations.
Lastly, the report mentioned the potential for Goodyear to gain materially in price and/or shipment volume due to its advantageous position in relation to the new tariffs. With less exposure to the tariffs than the broader industry, Goodyear is well-positioned to navigate the current economic landscape.
In other recent news, The Goodyear Tire & Rubber Company has reported its first-quarter earnings for 2025, revealing an adjusted loss per share of $0.04, which missed the analyst forecast of a $0.05 EPS. The company’s revenue also fell short, coming in at $4.3 billion compared to the anticipated $4.42 billion. Despite these challenges, Goodyear achieved a net income of $115 million, largely due to a $260 million gain from the sale of its OTR business. In leadership changes, Goodyear appointed Jason J. Winkler, CFO of Motorola Solutions (NYSE:MSI), to its Board of Directors, effective May 15, 2025, enhancing its financial expertise on the board. Additionally, Grégory Boucharlat was named senior vice president of Global Commercial, tasked with overseeing the company’s commercial tire business worldwide. On the product front, Goodyear launched the Eagle F1 Asymmetric 6 tire, which was named the 2025 Test Winner by AutoBild Magazine. This tire caters to the ultra-high-performance segment and is available in over 100 sizes, emphasizing Goodyear’s focus on innovation and meeting market demands.
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