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Investing.com -- Shares of Goodyear Tire & Rubber Co (NASDAQ:GT) soared 10.7% on Monday following an upgrade by BNP Paribas (OTC:BNPQY) Exane, which dubbed the company a "true tariff winner" and heightened the price target. Analyst James Picariello elevated the stock to Outperform from Neutral, highlighting Goodyear’s estimated 10.5 percentage points cost advantage in the U.S. due to tariffs and its potential for price/mix-led earnings growth.
Picariello’s report indicated that Goodyear’s cost advantage stems from the current Section 232 auto tariffs, which levy a 25% duty rate on about 55% of all U.S. tires sold that are non-USMCA-compliant. As Goodyear is the largest tire producer in North America and only 12% of its U.S. sales are subject to these tariffs, the company enjoys a significant cost benefit. The analyst expressed confidence in Goodyear’s ability to leverage this advantage for earnings upside, emphasizing the industry’s need to price for tariffs.
The report also noted Goodyear’s progress in narrowing its margin gap compared to peers and reducing net leverage, which is expected to reach healthy levels by next year. The success of the ’Goodyear Forward’ cost savings initiative, which is on track to achieve more than $1.5 billion by the first half of 2026, and the company’s effective divestitures are contributing to this positive outlook.
In light of these developments, BNP Paribas Exane has raised its estimates for Goodyear’s EBIT and EPS for 2026-2027, with the new price target set at $15, up from the previous $11. This valuation is based on an unchanged multiple of approximately 4.4 times the estimated 2026 EV/EBITDA, compared to peers at 4.9 times, reflecting Goodyear’s net leverage and profitability.
The upgrade and raised price target reflect a bullish sentiment on Goodyear’s strategic positioning and its ability to capitalize on market conditions, which appears to resonate with investors as evidenced by the stock’s significant rise in the trading session.