TD Cowen initiates Goodyear stock with Buy, sets $14 target

On Thursday, TD Cowen began coverage on Goodyear Tire & Rubber shares (NASDAQ:GT), assigning the stock a Buy rating and setting a price target of $14. The firm’s analyst pointed to Goodyear’s status as an "unloved" stock that may be poised for a rebound under the direction of a new CEO. The analyst’s commentary highlighted the potential for a positive shift in market sentiment driven by a two-phase turnaround plan for the company.

The first phase of Goodyear’s strategic turnaround is expected to occur in 2025 and aims to focus on reducing debt and executing cost-saving measures. With a total debt of $8.8 billion and a debt-to-equity ratio of 1.85, as reported by InvestingPro, this focus on debt reduction appears crucial. The analyst at TD Cowen anticipates that this initial phase will lay the groundwork for improved financial stability for the tire manufacturer.

The second phase, projected to start in 2026, is predicted to see an increase in tire volume, particularly from the U.S. market’s first tire replacement segment. This increase is long-awaited and is seen as a critical component of Goodyear’s recovery and growth trajectory. With current revenue of $18.88 billion and analysts expecting net income growth this year, the company’s turnaround potential has caught Wall Street’s attention.

The optimism surrounding the turnaround strategy is based on the belief that these concerted efforts will lead to a significant improvement in Goodyear’s operational performance. The analyst’s endorsement reflects confidence in the company’s ability to execute its plan and achieve the anticipated outcomes.

Goodyear’s new leadership is expected to be a driving force in the company’s attempt to revitalize its brand and financial health. With the analyst’s positive outlook and the Buy rating, Goodyear Tire & Rubber shares could attract investor interest as the company embarks on its journey to restructure and improve its market position.

In other recent news, The Goodyear Tire & Rubber Company reported fourth-quarter results that exceeded analyst expectations. The company posted adjusted earnings per share of $0.39, surpassing the consensus estimate of $0.30, with revenue reaching $4.94 billion, which was above Wall Street’s forecast of $4.91 billion. Despite a 3.3% decline in sales year-over-year and a 4% drop in tire unit volumes, segment operating income increased by 0.5% to $385 million. Looking ahead to the first quarter of 2025, Goodyear projects earnings per share of $0.28 on revenue of $4.60 billion, both figures exceeding analyst projections. Additionally, Goodyear reaffirmed its Goodyear Forward targets, indicating expectations for significant deleveraging in 2025.

In other developments, Goodyear’s Board of Directors approved amendments to the Outside Directors’ Equity Participation Plan, increasing the annual equity grant for directors from $160,000 to $180,000. The revised plan allows directors to defer the receipt of common stock represented by restricted stock units starting in April 2025. These changes have been filed with the SEC and incorporated into the company’s Form 8-K.

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