Analysts “Still Cautious” on Cooper Shares

A financial analyst report on the fortunes of Cooper Tire suggests that investors will continue to be cautious with the American tyre manufacturer despite some positive signs.

The Deutsche Bank study states that Cooper’s “‘clean’ EPS loss, adjusted for a ‘normal’ 30 per cent tax rate, would have been ($0.26), compared with our ($0.23) estimate.” This figure is one that the Bank believes will deter investors for the time being, alongside “continued market share declines, high cash burn, lack of identifiable cost reductions, and warnings of further raw material increases.” On the other hand, the analysis states that the company’s plan “to raise prices by ‘up to 10 per cent’ in October” will mean that the share price will retain its strength.

The report concludes: “Although we believe that CTB’s valuation has declined to relatively attractive levels, we believe that investors will remain on the sidelines until they can gain confidence in the bridge to significantly higher levels of earnings/cash flow (which will require more stable market share, and evidence of significant cost improvement).”