Shares of Goodyear Tire (GT) and Cooper Tire (CTB) are under pressure after Michelin (MGDDY) cut its full year market forecasts and said a sales slowdown would worsen in the fourth quarter. The latter cited weaker Chinese vehicle demand and new EU emissions standards.

QUARTERLY RESULTS: Tire maker Michelin posted a 5.2% increase in third quarter revenue to $6.44B, as the company reported sales four days earlier than expected, according to Reuters. Having previously pledge to increase full year recurring operating profits, the company said its growth would amount to at least EUR200M. However, Michelin cut 2018 market growth forecasts to 0.5% from 1.5% for car tires and to a 1.5% decline in truck tires from a previously expected 0.5% expansion. The tire maker blamed weaker Chinese demand and new emissions standards that have hit European registrations.

GOLDMAN SACHS ON THE SIDELINES: On Tuesday, ahead of quarterly results, Goldman Sachs analyst Gungun Verma had downgraded Michelin to Neutral and lowered his price target on the shares to EUR126 from EUR143. Investor sentiment has deteriorated against a tough macro backdrop and a slowing automotive demand scenario, including sustained deterioration in China automotive demand, production declines in Europe due to WLTP-related changeovers, and weakness in Latin America production, he contended. The analyst added that he sees more value elsewhere in European Automobiles, like Continental AG (CTTAY) and TI Fluid, both Buy rated, and Conviction Buy-rated CNH Industrial (CNHI).

PRICE ACTION: In afternoon trading, shares of Goodyear Tire have dropped almost 5% to $20.45, while Cooper Tire’s stock has slipped more than 3% to $24.76.