CTTAY CONTL AG S/ADR : Bullish and Bearish Analyst Opinions

Continental CEO warns that rising oil prices directly impact raw material costs (synthetic rubber/carbon black are oil derivatives). He notes there is a lead time before these costs hit the P&L, but the impact is coming. Tire manufacturers operate on a lag. They will incur higher input costs immediately but cannot raise prices on consumers fast enough to offset it (typically a 6-month lag). This guarantees margin compression in the coming quarters. AVOID/SHORT Tire Manufacturers (Continental, Goodyear). Oil prices collapse quickly, or demand for replacement tires spikes unexpectedly.