J.P. Morgan Ups PT To $21 On GT

J.P. Morgan, citing 1Q numbers and an improved outlook, has raised its price target from $17 to $21 on Goodyear GT. Says J.P. Morgan, in the report, “We revise our 2011e EPS to $1.20 (vs. $0.32 earlier) mainly on 1Q beat and improved outlook on price/mix vs. raws spread (revised model assumes -$19MM spread for FY2011, vs. -$374MM previously). We also revise 2012e EPS to $2.60 vs. $2.25 earlier (based on +$25MM favorable price/mix-to-raws spread), and leave 2013e EPS unchanged at $3.00, but now believe the odds of $3 being achieved in 2012 have improved. Coming out of the quarter, our GT thesis is unchanged, but we are directionally more bullish on pricing and mix. Our revised Dec-2011 price target of $21 (vs. $17 earlier) applies an 8x P/E to our 2012e EPS. Central to GT shares being able to command a higher multiple long-term will be the company's ability to reduce its NAFTA breakeven point through greater labor flexibility, a topic we discuss in greater detail in this note.” J.P. Morgan maintains an Overweight rating on GT. GT closed at $18.15 on Friday.