Cooper Tire & Rubber Co. (CTB), a U.S. tiremaker, tumbled the most in more than a year after KeyCorp downgraded the stock to hold from buy, citing possible industrywide price volatility when tariffs on Chinese tires expire.
Cooper fell 8.7 percent to $20.07 at 12:01 p.m. after declining as much as 9.7 percent for the biggest intraday drop since Aug. 18, 2011. The Findlay, Ohio-based company, up 57 percent this year through yesterday, was among the biggest decliners in the Russell 2000 Index. (RTY)
A U.S. tariff on Chinese tires, set to expire on Sept. 26, could weigh on stocks of U.S. manufacturers as rivals in the Asian nation cut prices on the low-end of the market by 10 percent to 15 percent, Brett D. Hoselton, a KeyCorp (KEY) analyst, wrote in an investor note yesterday.
“Cooper Tire can lower pricing on its opening pricing- point tires by 10 percent to 15 percent with no impact on operating income,” Hoselton wrote. The company’s “other products are potentially at risk of declining as well, driven by the lower end of the market creating a significant pricing gap relative to higher tiered products.”
Goodyear Tire & Rubber Co. (GT) fell 3 percent to $12.98, after earlier dropping as much as 5 percent.
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