FBR Capital Reiterates a Buy Rating on Cooper Tire Rubber

By Jason Carr

In a report issued on November 1, Christopher Van Horn from FBR Capital reiterated a Buy rating on Cooper Tire Rubber (NYSE: CTB), with a price target of $48. The company’s shares closed yesterday at $34.95.

Van Horn said:

“We think that Cooper Tire continues to perform well in a somewhat challenging industry environment as its Cooper branded tires and commercial truck tires continue to outperform. Although there are robust macro demand tailwinds for the aftermarket tire space, lower U.S. original equipment (OE) volumes and increasing debate over pricing sustainability have contributed to some negative sentiment. Our response is that Cooper is mostly an aftermarket business (with a growing OE component that is mainly concentrated in China) and that an ongoing shift to high-value mix should help offset industry pricing pressure. We highlight two data points for investors to consider: The China OE business is up 90% year over year, and we estimate that Cooper’s high value-add tires represent more than 60% of the company’s total volume. There are also relatively positive trends in truck and bus radial (TBR) tires and in Latin America, as noted below. All things considered, we think that Cooper remains on the right track and that the shares represent a compelling upside opportunity.”

According to TipRanks.com, Horn is a 3-star analyst with an average return of 2.2% and a 42.3% success rate. Horn covers the Consumer Goods sector, focusing on stocks such as Standard Motor Products, Federal-Mogul Corp., and Tower International.

Cooper Tire Rubber has an analyst consensus of Moderate Buy, with a price target consensus of $41.50.

Based on Cooper Tire Rubber’s latest earnings report from June 30, the company posted quarterly revenue of $740.3M and quarterly net profit of $70.75M. In comparison, last year the company earned revenue of $782.4M and had a net profit of $53.18M.

Based on the recent corporate insider activity of 33 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of CTB in relation to earlier this year. Most recently, in April 2016, Steven M. Chapman, a Director at CTB bought 2,631 shares for a total of $40,004.

Cooper Tire & Rubber Co. engages in the manufacture and trade of tires. It operates through the following geographical segments: North America, Latin America, Europe, and Asia. It offers replacement tires for light trucks, sport utility vehicles, and passenger cars. The company was founded by John F. Schaefer and Claude E. Hart in 1914 and is headquartered in Findlay, OH.