By Denna Bowman
Shares in the Goodyear tyres company experienced an upwards bounce yesterday after an analyst upgraded the stock based on a sharp decline in the stock’s value.
Goldman Sachs analyst Patrick Archambault upgraded the stock to “Buy” from “Neutral,” noting shares have declined 20 percent since the end of October when the US tyres manufacturer issued weak guidance for the rest of the year.
Archambault said: “We see the sell-off, which put shares back to their July 21st levels, as an opportunity to build positions in the shares.”
He pointed to the Akron, Ohio, company’s recent US price hike of as much as 6 percent in boosting his earnings estimates for next year to $1.05 per share from 95 cents per share.
Analysts polled by Thomson Reuters expect, on average, 78 cents per share.
Archambault also raised his price target to $19 from $17 on increased consumer tyre demand.
Other factors which indicate an improvement in performance include benefits from improved fixed cost absorption and continued cost reduction from better manufacturing flexibility as a result of the new United Steel Workers contract.
In afternoon trading, shares rose 57 cents, or 4.2 percent, to $14.31.