This stock was the day’s top gainer, buoyed by an analyst upgrade.
Thursday’s massive stock market selloff hit most stocks across all sectors hard, with the Dow Jones industrial Average shedding some 1,400 points and the Nasdaq dropping nearly 5%.
But there are some bright sports out there among the wreckage, including the Goodyear Tire & Rubber Co (NASDAQ:GT), which was up about 12% on Thursday. It was the day’s top gainer.
The reason is mainly tied to President Donald Trump’s tariffs. Goodyear should, in effect, benefit from the tariffs as it has less exposure to them than its major competitors.
That’s one of the reasons it got an upgrade from Deutsche Bank this week.
Goodyear Has Competitive Advantages
Edison Yu, an analyst at Deutsche Bank, wrote in a research note that Goodyear should be a “relative winner” during the trade war since most of its U.S. demand comes from domestic manufacturing and tires, reported the Fly. That means it is less exposed to paying tariffs on imports.
But there are other advantages, as well, points out Yu. Goodyear focuses on replacement tires, which account for 82% of its sales, as reported by Investing.com. This is a higher margin business compared to new, original equipment (OE) tires.
It could be particularly lucrative if consumers decide to keep their current cars instead of buying new ones, as this would boost replacement tire sales. With automakers facing high tariffs, new car costs are expected to soar, which means more people will be keeping their old cars and replacing the tires.
Analysts said a 15% drop in OE tire units for 2025 would require just 2.25% growth in replacement tire sales to offset the loss, due to their higher margins, reported Investing.com.
“While tariffs will be a headwind for the entire industry. However, we believe that Goodyear’s manufacturing position, higher exposure to replacement tires, and prior actions to diminish its exposure to low-cost import competition leave it well positioned relative to many suppliers in our coverage,” Yu and his team wrote in the research note, per Investing.com.
In addition to these potential benefits, Yu noted that Goodyear has done an excellent job in streamlining expenses. It has sold off some underperforming businesses and is in the process of divesting other assets. As a result, it is on pace to meet its goal of $1.5 billion in cost savings and margin improvement by the end of 2026.
Price Target Upgrade
Deutsche Bank upgraded Goodyear stock to a buy — and gave it a $13 per share price target. That would be up 30% from the current share price.
That’s a bit higher than the consensus price target of $11.75 per share, but even that suggests a 13% increase in what is expected to be a sluggish market.
Goodyear has been in the middle of a turnaround plan, Goodyear Forward, focusing on cost containment. In Q4, it resulted in a net income of $76 million, or 26 cents per share, up from a net loss of $291 million in the same quarter a year ago.
With these competitive advantages, along with its aggressive expense reduction initiative, Goodyear should be in a good position to gain market share.