Join        Login             Stock Quote

Cooper Tire & Rubber (CTB) Upgraded To 'Buy' By Deutsche Bank

 September 24, 2012 01:08 PM

(By Balachander) Cooper Tire & Rubber Co. (NYSE:CTB) shares were upgraded to "Buy" from "Hold" by Deutsche Bank analyst Rod Lache.

"In anticipation of expiring tariffs, we have been speaking to manufacturers, dealers, and wholesalers. Our findings were encouraging, leaving us more bullish on the outlook for both Cooper Tire and Goodyear Tire (NYSE:GT) than we had been anticipating," the analyst wrote.

Lache, who has a price target of $24 on CTB, said the impact of Chinese tariffs expiring may be more benign than he previously anticipated.

[Related -Trying To Beat The Market Is A Fool's Errand]

"Some tire price deflation is likely inevitable. Margins for tire companies would otherwise rise to unfathomable levels. We would focus on the spread between prices and raw materials rather than pricing in isolation," Lache wrote.

Raw materials used in tires have declined by 18% since April, and the analysts estimates that every 1% decline in raw material costs adds $0.26 to the EPS of Goodyear or Cooper tire.

Lache reiterated his "Buy" rating on the stock.

If we assume that Cooper tire gives up only 60% of the benefit of declining raw material costs (vs. our current estimate of 100%), there could be $0.62 EPS upside vs. our current est.

"The key risk to our investment thesis is the outlook for industry pricing, driven by unforeseen deterioration in the industry's supply/demand dynamic," Lache wrote.

[Related -Stocks End Lower Amid Fed Uncertainty; First Solar, Inc. (FSLR) Plunges]

The stock, which has been trading in the 52-week range of $9.64 to $23.40, added 4.36% to trade at $20.81 on Monday.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageRussell 2000 Showing Relative Weakness at the New Highs

A quick “Quad Index” Grid shows us that the small-cap Russell 2000 is showing relative strength to the read on...

article imageThe Poster Boy For Liberal Economics Discovers The Tax Factor

Paul Krugman seems to be having a supply-side-economics moment… sort of. Raising taxes, the NY Times read on...

article imageMacroprudential Policy And Distribution Of Risk

There is very little doubt that housing prices and leverage played a strong role in the global financial read on...

article imageIs the World Turning Japanese?

Many really think so, but reality suggests read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.