NEW YORK (AP) -- A Jefferies analyst downgraded Titan International Inc. to "Hold" from "Buy," saying that the company's profits and sales could be pressured as a result of industry wide demand problems.
The Quincy, Ill., the wheel and tire supplier said late Friday that commercial tire inventories at its customers have been building up for more than a year and those companies are now selling those tires to aftermarket customers, often at a discount, which affects the overall tire industry.
Titan added that the selling prices of all of its products are also going down, because the raw material costs involved in making them has been dropping.
The company said it expects to cut its predictions for the year, but first needs to determine exactly how much its mining company customers will be reducing their inventories.
Analyst Stephen Volkmann, who also cut his price target for the stock by $4 to $21, said his previous "Buy" rating had been based on the company's low share price and expectations that its recent profitability issues were short term and would begin to improve in the second quarter.
But Friday's news suggests that those profitability problems could continue, he said.
Titan shares finished at $20.40 on Friday. They have traded in a 52-week range of $19.07 to $32.65.
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