{
  "id": 18302596,
  "title": "Barclays turns bearish on Michelin as cost headwinds outweigh pricing benefits",
  "url": "https://urgent.news/2026/11/05/barclays-turns-bearish-on-michelin-as-cost-headwinds-outweigh-pricing",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-11-05T12:21:14.000Z",
  "source": {
    "name": "Investing.com",
    "slug": "investing-com",
    "url": "https://www.investing.com/news/stock-market-news/barclays-turns-bearish-on-michelin-as-cost-headwinds-outweigh-pricing-benefits-5003624"
  },
  "original_language": "en",
  "account": "Barclays has downgraded Michelin to underweight from equal weight, citing cost headwinds that are expected to outweigh any pricing benefits. The investment bank now expects Michelin's 2027 segment operating income to be about 6% below market consensus, at €2.85 billion, down from a previous estimate of €3.05 billion. Barclays forecasts a modest recovery in sales volumes in 2027, with the bulk of the growth anticipated in the second half of the year, contingent on a resurgence in Beyond Road volumes within the Specialties business. However, demand in consumer and transportation markets is predicted to remain mixed, particularly during the first half of the year. Michelin is set to face a raw-material cost headwind of approximately €570 million in 2027, an increase from the broker's earlier projection of €460 million, surpassing the company's initial estimate of about €300 million. Additionally, labour costs are anticipated to contribute €160 million, while transport and energy costs will add €80 million. The cancellation of a roughly €100 million benefit from IEEPA, which bolstered Michelin's 2026 outlook, will further strain the company. Cost savings are expected to decrease to €60 million in 2027 from €120 million in 2026 and €200 million in 2025, primarily due to remaining benefits from restructuring initiatives in France and Germany. The elimination of cost savings from the closure of the BFGoodrich/Tuscaloosa plant in the United States is expected to begin in 2028. Price increases implemented in the second quarter of 2026 are projected to remain effective throughout 2027. Indexation clauses covering about 35% of the business began generating positive impacts around the transition from the third to fourth quarters of 2026. However, Barclays warns that these offsets may prove insufficient if inflation materializes closer to its projections, potentially necessitating additional price hikes that could negatively impact volumes in a fragile demand environment. For 2026, Barclays rated Michelin's third-quarter performance as underwhelming, although the bank still believes its segment operating income guidance of more than €2.72 billion at constant exchange rates remains attainable, albeit with a smaller buffer. The bank reduced its 2026 forecast to €2.75 billion from €2.80 billion, reflecting an expected volume decline of 0.9%, contrasting with its earlier projection of 0.4% growth. Barclays estimates Michelin's 2026 free cash flow at around €1.48 billion, which is lower than Michelin's guidance of more than €1.60 billion, as higher inventory values impede cash generation. Michelin's stock closed at €32.43 on November 3, resulting in a Barclays' price target implying a 7.5% downside. The broker noted that Michelin's free cash flow yield is not particularly attractive when compared to direct competitors.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}