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Goodyear Tire (GT +4%) is burning some rubber today following an analyst upgrade at Deutsche Bank to "Buy" from "Hold." However, Briefing.com notes that the tire maker remains stuck in neutral as it contends with a macroeconomic landscape ripe with headwinds, from increased low-end tire imports flooding the market to uncertainty surrounding tariffs. At the same time, OEM production continues to reset to a lower base.

Nevertheless, GT is confident it can achieve certain targets despite its formidable operating environment.

• The Goodyear Forward plan is already bearing fruit. The plan centers on cost performance by streamlining its operating model to address duplication of effort and excess costs. The plan also focuses on improving GT's top-line growth. For perspective, GT has not posted yr/yr sales growth since 1Q23. Throughout 2024, GT exceeded its plan goals, resulting in $350 mln of FY24 segment operating income growth ($200 mln when backing out insurance recoveries). GT is not letting off the gas in 2025, expecting to deliver $750 mln in cost benefits this year.
• GT is reinvesting its savings into new product lines, five of which are set to launch this year. The products revolve around high-margin SKUs and premium-tier tires, which should help bolster its margin profile. Management mentioned that coverage at the premium end of the tire market is a massive opportunity and remains steadfast in making it happen. The company conceded that it has had its share of stumbles trying to extract gains in this market segment but is using these setbacks as an experience to journey ahead without losing its footing this time.
  • GT aims to reach 10% segment operating income margins for the year, supported by new products and its Goodyear Forward plan.
• The current year is shaping up to be slightly more favorable than last year. On the consumer side, GT expects overall global growth in 2025, with a stronger European and Asian market. The U.S. market will likely continue to see volatility relative to imports. As such, GT expects a flat first half of the year, with growth materializing during 2H25. From a commercial standpoint, GT expects replacement demand to stabilize, progressing throughout the year. As such, it should see a similar growth cadence as its consumer business.

Plenty of uncertainty could spark unforeseen setbacks related to GT's goals this year. The first half of the year will remain muted, putting outsized pressure on the back half of the year to experience a noticeable uptick in demand for GT to hit its marks. However, GT may be in the early stages of stabilization. With its Goodyear Forward plan extracting meaningful savings benefits, the company is well-positioned for a considerable bounce once demand conditions begin to recover.