Goodyear Tire to rally more than 60% on autonomous driving, Morgan Stanley says

Key Points
  • Morgan Stanley recommends Goodyear Tire shares, saying autonomous driving will lead to more tire sales.
  • The firm raises its price target for Goodyear Tire to $52 from $24, representing 61 percent upside from Wednesday's close.
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

Morgan Stanley's Adam Jonas raised his rating on Goodyear Tire to overweight from underweight, predicting new emerging autonomous driving technologies and shared transportation services businesses will lead to an increase in tire sales.

"GT's business is powertrain-agnostic, has low obsolescence risk, is not exposed to used car prices, and can benefit from shared and automated driving," Jonas wrote in the note to clients Thursday entitled "More miles = more tires."

"We have high conviction that [shared transportation] mobility is a deflationary business that produces an unprecedented growth in vehicle miles traveled. Unless and until flying cars take significant share from terrestrial cars, we see this miles megatrend as a secular tail wind for tire companies."

Jonas increased his price target for Goodyear Tire to $52 from $24, representing 61 percent upside from Wednesday's close.

The analyst is known for having some of the most aggressively bullish predictions on Tesla's ambitions including a note published last year highlighting an Uber-like transport service with autonomous electric vehicles.

"Our recent meeting with Goodyear senior management in Akron [Ohio] revealed a high sense of awareness ... of the profound technological and business model changes impacting the global mobility market," he wrote.

Jonas predicts global auto miles traveled will rise to 20 trillion miles by 2030 from 10 trillion miles because of the shared transportation services and autonomous driving trends.

"The technological revolution in mobility may drive growth in miles traveled at 2x historic levels, supporting tire volume and pricing. Longer term we see a scenario where GT becomes a transport services firm with less cyclical revenue," he wrote.

A Goodyear spokesperson declined to comment for this story.

— CNBC's Michael Bloom contributed to this story.