Morgan Stanley released its latest analysis of the Japanese tire sector, maintaining Overweight (OW) ratings on two key players that show promising growth potential despite varying market challenges.
The investment bank’s assessment focuses on companies positioned to capitalize on North American market opportunities while managing industry-specific headwinds.
1. Toyo Tire -- Morgan Stanley maintains an Overweight rating on Toyo, citing rising expectations for the company’s growth strategy and shareholder returns in its upcoming Medium-Term Plan, scheduled for announcement on March 4.
Analysts believe there is further upside potential as the market continues to price in demand growth for WLTR (Wide Light Truck Radial) tires in North America, a segment where Toyo has established a strong presence.
2. Bridgestone -- Also receiving an Overweight rating, Bridgestone shows promise through its efforts to revitalize the Firestone brand in North America.
Morgan Stanley notes positive expectations surrounding the company’s restructuring impact. However, analysts flag weak OE (Original Equipment) demand for TBR (Truck and Bus Radial) tires in both North and South America as a potential risk factor, while emphasizing that replacement demand remains solid in these markets.
