Investing.com - Goldman Sachs downgraded Bridgestone Corp. (TYO:5108) (OTC:BRDCY) to Neutral from Buy on Thursday, citing limited upside potential as the stock trades near its price target. The firm raised its price target to JPY3,650 from JPY3,600.
Goldman Sachs analyst Kota Yuzawa revised the firm’s operating profit forecasts for fiscal years ending December 2026, 2027, and 2028 higher by 5%, 1%, and 2% respectively, reflecting fluctuations in raw material prices.
The firm noted that global demand for passenger car tires remains flat. Ultra-large mining tires continue to show solid demand due to rising metal prices, but demand for large tires used in coal applications appears softer, which may limit further upward revisions to earnings forecasts.
Competitors appear to be taking a cautious stance toward further price increases in the core U.S. market. The upward revision was limited due to the recent rise in natural rubber (RSS3) prices.
The company’s stock valuation stands at a price-to-earnings ratio of 11 times and a price-to-book ratio of 1.3 times based on Goldman Sachs’ fiscal year 2027 estimates, representing a premium of nearly 30% to 40% over other Japanese tire makers. Current market data shows the stock trading at a P/E of 13.6 with a PEG ratio of 0.42, suggesting attractive value relative to growth prospects. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment. The firm said this reflects the company’s competitive advantage of having a high local production ratio in the U.S., its exposure to highly profitable mining tires, and proactive capital allocation, including a JPY150 billion share buyback. An InvestingPro tip confirms that management has been aggressively buying back shares, while the company maintains a "GREAT" financial health score of 3.01.
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