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KeyBanc maintains its rating for Goodyear stock based on 2008 estimates

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KeyBanc Capital Markets is still bullish on Goodyear Tire & Rubber Co.'s stock. According to Managing Director Saul Ludwig, the broker dealer maintains its "BUY" rating, in part based on first-quarter 2008 performance estimates.

In determining his rating, Ludwig spoke with several tire dealers. Here are some of his insights.

* First-quarter 2008 comp store units are probably down a little (maybe about 4%), "but better in Goodyear brand products."

* Poor fill rates on certain Goodyear lines are limiting potential sales.

* "Pricing is rock solid from all manufacturers -- including Goodyear -- and special deals are non-existent."

* "Dealers generally have good things to say about Goodyear, including management and new Goodyear brand products, but comments remain mixed about Goodyear's performance in Dunlop and Kelly lines."

Ludwig also balanced Goodyear's projected EBIT in North America ("Goodyear's expected... replacement volume in the first quarter was probably under our +5% forecast, and that may well cause North American EBIT to fall below our $54 million estimate") against EBIT internationally ("Strong international volume... and strong foreign exchange rates should enable international EBIT to top KeyBanc's first-quarter estimate of $285 million").

As Goodyear's cost-saving programs begin to bear fruit, its North American EBIT "should see a major improvement -- probably up 50%" by the third quarter, he adds.

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