Jefferies puts the brakes on Goodyear rally after tiremaker rides Trump trade to 9-year high

A mechanic stacks used tires outside the service bay of a Goodyear Tire & Rubber Co. auto garage in Shelbyville, Kentucky.
Luke Sharrett | Bloomberg | Getty Images

Valuations for Goodyear Tire & Rubber are not as compelling anymore after the strong rally in the stock this year on expectations for an industrial economy revival under the Trump administration, Jefferies told clients on Friday, downgrading the stock to hold from buy.

"Our buy case on GT was based on valuation discount to peers and cash returns. GT's strong performance YTD has been largely driven by rerating and limited estimate upgrades; thus closing some of the valuation discount to peers," equity analyst Ashik Kurian wrote in a research note.

This week, shares of the tire maker reached a nine-year high, up 14 percent in 2017. Given the strong gains, Jefferies says the upside potential from here appears limited, especially as earnings expectations this year aren't as robust as investors anticipate. The shares declined Friday after the call.