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Investing.com -- In a note Monday, Deutsche Bank (ETR:DBKGn) upgraded Goodyear Tire (NASDAQ:GT) & Rubber to Buy, citing improved execution on asset sales and cost savings under the company’s Goodyear Forward restructuring plan.
“The rubber has met the road,” Deutsche Bank analysts declared, highlighting progress in divestitures and operational efficiencies.
Since December, Goodyear has closed on its OTR business, announced the sale of its Dunlop IP, and reiterated expectations that its chemicals divestiture will be completed by year-end.
The bank expressed confidence that Goodyear is on track to achieve its $1.5 billion in cost savings and margin improvements by the end of 2026.
Tariff policy may also play to Goodyear’s advantage, according to the firm.
With most of its U.S. demand served by domestic manufacturing, Deutsche Bank noted that the company is not currently impacted by the recent tariffs on imported goods.
Additionally, they note that any potential weakness in new vehicle sales is expected to be offset by a higher mix of replacement tires, which carry better margins.
Deutsche Bank highlights that the Goodyear Forward plan has already yielded results, with cost-saving expectations increasing from $1.3 billion to $1.5 billion.
“The actions should enable 4Q25 Segment Operating Income (SOI) margin approaching 10% compared to just 7.5% in 4Q23,” Deutsche Bank noted.
The company is also said to be progressing on asset rationalization, expecting over $2 billion in proceeds. The OTR sale was completed for $905 million, while the Dunlop deal is worth about $701 million. The upcoming chemicals business sale is anticipated to be completed at a valuation of at least 5x operating income.
With Goodyear’s valuation at trough levels (~3.75x 2025E EBITDA) and a price target of $13 (nearly 50% upside), Deutsche Bank sees an “attractive risk/reward” for the stock.