Noble initiates on small tire maker Titan with 'buy' and TP implying 36% upside

Investment bank Noble Capital Markets has initiated coverage of Titan International, a small-cap company that designs and produces both wheels and tires for the agriculture markets. It recommends buying the stock with a target price implying 36% upside to current quotes. The company has recently eliminated noncore assets and is now ready to take advantage of the growth of demand in end markets, Noble Capital Markets argues.

Noble Capital Markets rates Titan International «outperform» with a target price of $11 per share, meaning upside of nearly 36% versus the close on Friday, June 6.  

Titan has undergone a strategic transformation since 2019, eliminating noncore assets, improving the balance sheet, and diversifying its business through acquisitions, Noble Capital Markets says. For example, the company sold its wheel business in Australia in 2022, bought peer Carlstar Group in February 2024, and expanded its licensing agreement with tire maker Goodyear in late April. 

Though Titan is still subject to cyclicality, Noble Capital Markets believes it is well positioned to capitalize on improving end market demand as the global populations and incomes rise. In 2023, global wealth grew 4.2% year over year, while the pace of wealth growth has been rising since 2008, a July 2024 UBS report stated.

This is leading to higher demand for food, which is generating higher demand for infrastructure and rising infrastructure spending. These trends bode well for Titan, which produces wheels, tires, and undercarriage systems for machinery used in agriculture, construction, forestry, and mining, among other sectors. 

Amid a stable economic backdrop, Titan, as it is today, could generate adjusted EBITDA in the range of $250-300 million annually, double the current figure, Noble Capital Markets estimates. In 2025, EBITDA is expected to be $113.8 million on revenue of $1.86 billion. 

Titan shares have risen 0.7% in premarket trading today, June 9. Since the beginning of the year, the company's market value has grown more than 19%. The stock has three ratings from Wall Street analysts, all being «buys,» according to MarketWatch. The average target price of $11.60 per share is 43% higher than current quotes.