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Investing.com - Nomura upgraded Yokohama Rubber Co (TYO:5101) stock rating to buy from neutral on Thursday, citing improved margins and expected recovery in agricultural machinery tire demand.
The Japanese brokerage raised its price target on the tire manufacturer to JPY4,800 from JPY4,100, representing potential upside based on the company’s improving business fundamentals across multiple segments.
Nomura highlighted three key factors supporting its more bullish outlook: improved margins in existing tire operations, profit recovery from structural reforms and anticipated demand growth for farm machinery tires, and profit contributions from the recently acquired Goodyear OTR business.
The firm expects demand for agricultural machinery tires to begin recovering in the second quarter of 2025 and return to year-over-year growth in the second half, though it applied a 50% discount to benchmark valuations due to ongoing uncertainty in the agricultural machinery market.
"Uncertainty about the agricultural machinery market, including US trade policy and grain prices, has yet to be dispelled," Nomura noted in its analysis while setting the new price target based on a price-to-earnings multiple of 8 times its forecasted 2026 earnings per share.
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