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KeyBanc holds onto 'Hold' rating for Goodyear stock

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"We see no catalysts to justify changing our 'Hold' rating at this time," says Saul Ludwig, managing director for KeyBanc Capital Markets, about Goodyear Tire & Rubber Co.'s stock rating.

However, KeyBanc is still lowering both its full-year 2008 and 2009 earnings per share estimates.

Assets in Goodyear's pension fund stood at $6.6 billion on Dec. 31, 2007. "Given the weak equity and debt markets, the value of those assets at year-end 2008 may be only $4.7 billion," says Ludwig. In addition, pension expense probably will increase sharply in 2009.

Ludwig predicts replacement tire demand in North America may increase slightly in 2009 as gasoline prices fall, thus spurring more driving. "Nevertheless, Goodyear still has too much capacity, so we cannot count on much help to EBIT (earnings before interest and taxes) from this region."

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