FINDLAY, Ohio (March 6) — Analyst Saul Ludwig of KeyBanc Capital Markets has downgraded Cooper Tire & Rubber Co.´s stock to "hold" from "buy."
Ludwig said he expects the Findlay-based tire maker will post a loss in the first quarter based on the combination of soft volume in the industry and high raw material costs. When Cooper recently reported its fourth quarter and 2005 results, officials did not provide future guidance in part because of the uncertainty of raw material prices.
Ludwig expects Cooper to outpace the industry in terms of volume, but the industry itself is off to a slow start this year, he wrote. He said shipments were down 5 percent in January, and he believes February also was soft.
"(Cooper) is not faring poorly relative to the industry," Ludwig wrote, referring to volume. "However, we estimate that their volume will be off 2 percent in (the first quarter 2006). The combination of soft volume and high costs is what leads us to now expect a loss in (the first quarter)."
Ludwig said he does not expect meaningful improvement until the third quarter, "thus suggesting little in the way of a catalyst to excite the shares until there is clarity of meaningful earnings progress."