Deutsche Bank warns ‘strange’ earnings update from Goodyear raises downside risks
Goodyear Tire & Rubber Company (NASDAQ:GT) shares slid on Friday as Deutsche Bank analyst Emmanuel Rosner took a dim view of the company’s latest earnings update.
He called the update “strange”, noting that the following Q1 guidance was disappointing a weak Q report, but long-term bullish guidance. Rosner highlighted weak trading volumes and “major inflationary pressures” in the Q4 report, which he doubts will persist through 2023.
“Management has acknowledged that and is eyeing another significant decline in SOI in Q123 due to weakening global volumes, low overall cost absorption and cost inflation,” he noted. additional immaterial”. “However, it also suggests that SOI in Q2 could be roughly flat year-on-year at $360 million or more, and full-year 2023 earnings could also be flat, asking for a ratio of $360 million or more. exit in the first 2 months is ~$450 million per quarter, a GT level not achieved since 2016.”
Rosner considers this forecast to be overly optimistic, creating more downside risk to the stock in the coming quarters.
He concluded: “We see significant negative risks to the company’s outlook, given the uncertain output trajectory, persistently high costs, and increasing price and competition risks. increased due to the recovery of imported tires and lower raw materials”.
Rosner has specified a $10 price target for the stock along with a Hold rating. Goodyear Tire shares (GT) slipped 2.06% on Friday.
Read more about details of recent earnings results.