Zacks Investment Research downgraded shares of Honda Motor Co. Ltd. (HMC) from OUTPERFORM to NEUTRAL on October 17, 2012, with a target price of $33.00.
Honda is well positioned to take advantage of stricter environment regulations given its long-term focus on hybrid vehicles. Given these factors and favorable model mix and effective cost reduction measures, the company anticipates a revival in sales and profits for fiscal 2013. In the first quarter of fiscal 2013, it revealed more than fourfold increase in profits to 131.72 billion ($1.66 billion) or 73.09 ($0.92) per share. However, unfavorable foreign currency translation effects due to appreciation of the Japanese yen against most of the foreign currencies continue to mar the company's results. Further, we are worried about its declining cash flow. As such, we have downgraded the recommendation on the shares of the company to Neutral from Outperform with a target price of $33.00.
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