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Goodyear's stock remains a good buy over the long term, says Ludwig

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KeyBanc Capital Markets Inc. is maintaining its "BUY (2)" rating on Goodyear Tire & Rubber Co.'s stock.

According to KeyBanc Managing Director Saul Ludwig, tire sales were flat in the United States in the fourth quarter of 2008. In addition, Goodyear Tire & Rubber Co. "may have had a 4% decline" during the same period.

However, there are numerous signs that the company is headed for a bright 2008.

* International results are expected to be strong in the fourth quarter, with earnings especially strong in Eastern Europe, Asia and Latin America. (Goodyear will release its fourth-quarter and fiscal 2007 financial results on Feb. 14.)

* The company will continue to benefit from companywide cost savings resulting from 1) the 2006 labor contract, 2) plant closings (Tyler, Texas, and Valleyfield, Ontario), 3) downsizing in France, and 4) additional SG&A cuts.

* "Most dealers have rave reviews for the job Goodyear has done in the new product area over the past few years, and we expect that trend to continue," says Ludwig.

Although the slowing economic outlook in both the United States and Europe has forced KeyBanc to lower its global volume estimate for 2008 -- and, as a result, its projected earnings -- it believes Goodyear's stock will outperform the market over the long term.

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