The rise of electric vehicles should boost shares of Goodyear Tire & Rubber Company , according to Deutsche Bank. "We view Goodyear as a very large beneficiary from the industry shift to EVs, with very favorable economics and strong early market share traction," Deutsche Bank's Emmanuel Rosner said in a note Tuesday. Deutsche Bank upgraded Goodyear to a buy rating from hold. The firm also hiked its price target on the stock by $3 to $32, implying 47.5% upside from Tuesday's close. The firm called Goodyear an "under the radar EV winner" as a leading producer of electric vehicle tires. Goodyear has achieved a 60% win rate, or sales opportunities converted into deals, on EV tires with customers, much higher than its overall consumer tire market share, according to Deutsche Bank. The firm said just five to six global tire makers are competing in the EV space, meaning less competition. "We expect demand-supply dynamics for EV tires to be favorable for years to come, with particularly strong growth in demand," Rosner said. The higher price of EV tires should also boost profit margins for Goodyear. EV tires sell for 30% higher than tires for internal combustion engine cars, Deutsche Bank noted. That's because electric vehicles are heavier and rely more on braking, so EVs need better-performing and more complex tires. Overall, Deutsche Bank believes Goodyear is poised for earnings growth in 2022 and beyond, benefiting from price hikes and its acquisition of Cooper Tire & Rubber Company. Goodyear shares have been on a run this year, up about 99% in 2021 compared with the S & P 500's roughly 25% gain. —CNBC's Michael Bloom contributed reporting.
A mechanic stacks used tires outside the service bay of a Goodyear Tire & Rubber Co. auto garage in Shelbyville, Kentucky.