Deutsche Bank spotlights Goodyear as a winner from U.S. auto tariffs

Deutsche Bank upgraded Goodyear Tire & Rubber Co. from “hold” to “buy” yesterday, March 31, as it believes the U.S. small-cap tire manufacturer stands to gain from President Donald Trump’s tariffs on car imports.

Deutsche Bank has revised its outlook on tire manufacturer Goodyear and upgraded the stock from “hold” to “buy,” Bloomberg reports.

It believes Goodyear could benefit from U.S. auto tariffs for several reasons:

— The majority of demand for Goodyear tires comes from U.S. automakers.

— Tires are not included in the list of auto components subject to tariffs.

— If fewer new cars are purchased, consumers will need to buy more replacement tires for older vehicles.

Deutsche Bank is not the only outfit to upgrade Goodyear. CNBC reports that Argus now also has a “buy” recommendation on the stock. In a February 14 investor note, Argus analyst Bill Selesky wrote, “The company has reported inconsistent levels of profit growth over the past several years. But, we believe that an inflection point developed with the reporting of fourth quarter 2024 results, which were much better than we expected.” For the fourth quarter, the company posted net income of $76 million, versus a $291 million net loss a year earlier.

Following Deutsche Bank’s upgrade yesterday, Goodyear stock is up 5%.

Goodyear is a U.S. tire manufacturer. Its main rivals include France’s Michelin and Japan’s Bridgestone.

Founded 127 years ago in Ohio, Goodyear operates 53 manufacturing facilities in 20 countries, with major operations in North and South America, the Asia-Pacific region, and Europe. The company currently has 14 plants — eight in the U.S., two in Canada, and one each in Brazil, Chile, Colombia, and Peru.

Despite its scale, Goodyear has struggled with competition from low-cost countries like China and the impact of new manufacturing technologies. As a result, the company has seen a decline in its financial performance, and in the fourth quarter of 2022, it posted a net loss of $104 million — down 119% versus the net income of $553 million in the fourth quarter of 2021.

In 2023, the company announced a transformation plan to reduce costs significantly by downsizing its Virginia plant, cutting staff, and lowering R&D expenses.

Deutsche Bank notes that Goodyear is successfully executing on this plan. The company has announced major job cuts at its main plant as it shifts production from automotive to aircraft tires. Additionally, it closed the sale of its off-the-road tire business in February.

According to CEO and President Mark Stewart, Goodyear aims to cut $1.5 billion in costs by the end of 2025.

Goodyear has gained 5% since Deutsche Bank upgraded its view on the stock. However, since the transformation plan was announced, the company has lost almost 35% of its market value.

According to MarketWatch, out of the 10 analysts covering Goodyear, five have “buy” recommendations, while the other five rate it a “hold.” Their average target price is $12.12 per share, a third higher than current quotes.

For context, in early March, nine analysts rated the stock as “overweight,” with a target price of $11.47 per share, CNBC reported, citing FactSet.