Toyota Feels Weak US Market

Source: http://www.zacks.com/stock/news/14186/Toyota+Feels+Weak+US+Market
Posted on Wednesday, August 13th, 2008 | In Market Commentary, Stocks to Watch

Contributed by: Zacks Market Commentaries (http://www.zacks.com/) -

In 2009 first quarter, Toyota Motor Corp. (TM) reported diluted earnings per ADR of $2.14 compared to $2.94 in the corresponding quarter of the previous year. Net revenues decreased 4.7% year over year to $5.92 billion. The company attributes the decrease in revenues to soaring raw material prices and exchange rates fluctuations. Consolidated vehicle sales for the quarter amounted to 2.19 million units, an increase of 24,000 units compared with the same period of fiscal 2008.

The company continues to expand its production capacity in a manner that increases efficiency and meets local demand and simultaneously powering it to emerge as the worlds financially strongest automaker. A strong presence in North America has been further consolidated by gaining market share from the leading U.S. automakers. Moreover, the company also has a strong cash flow and a strong balance sheet.

However, Toyota is unable to offset sales losses in America even as it continues an aggressive expansion in China, the Middle East and other emerging markets. Sluggish US economy, rising costs, pricing pressures and huge capital expenditures prompt us to rate the stock a Hold with a six-month target price of $78.00.

On August 10, Toyota Motor announced raising prices on hybrid and commercial vehicles by 1 to 3% in 2009 for models such as the Prius hybrid car and the Dyna truck. The company will not raise prices for models including, the Corolla subcompact and the Crown luxury sedan. Toyota had determined that across-the-board price hikes would further dampen sales at a time when domestic demand is already weak.

Read the full analyst report on TM

“TM” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research