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BB&T describes Cooper Tire's 3Q results as disappointing, and adjusts estimates accordingly

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On the heels of the release of Cooper Tire & Rubber Co.'s third-quarter results, BB&T Capital Markets is maintaining its Buy (1) Rating on Cooper's stock.

According to Tony Cristello, senior vice president of equity research, Cooper's earnings per share (EPS) and total revenue were below BB&T estimates. He described the results as disappointing. "However, including the results of Oliver Rubber (which was sold to Michelin in October), Cooper would have reported in-line EPS."

Based on the results, BB&T is lowering its EPS estimates for the fourth quarter and 2007 fiscal year.

"While we are staying with our Buy (1) rating, we see little in the way of catalysts until the company can post Q4 results and demonstrate that gross margin pressure was more of an isolated event rather than a change in trend," says Cristello.

"Remember, the Cooper story has been based upon margin improvement driven by cost savings/profit initiatives. To date, (Cooper) has realized $67 million of its targeted goal for $100 million in 2007."

Cooper reported net income of $30 million for the quarter ended Sept. 30, 2007. That is an improvement of $55 million from the prior year. Net sales increased 11% to $768 million.

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