Toyota Motors (TM) Gets Sell Rating, Time to Buy?

Toyota Motors (TM) has taken a beating along with the rest of the market over concerns of a crumbling global economy, but with the move to hybrid and electric cars well underway and expected to continue (despite a temporary decline in fuel prices) Toyota will continue to benefit big as a leader in the fuel efficiency revolution. 

Is it time to take a look at Toyota as an investment?  The stock is now trading about 50% off the peak it hit at the end of 2006 and took another plunge yesterday on a Citi Sell call.  The analyst said, “The financial crisis in the US and Europe is leading the yen to strengthen rapidly and auto demand to drop sharply. Toyota, the world’s leading automaker, is also feeling the consequences. We expect Toyota’s earnings to deteriorate sharply in FY3/09 and FY3/10 and believe a major revision to management strategy is unavoidable…We think there is a risk the share price will continue to decline until there is greater clarity on changes in Toyota’s management strategy (global sales volume assumptions, etc) and the timing of an earnings bottom. We believe the shares are priced attractively on a long-term investment horizon, but also see downside risk in the near term given the number of management environment uncertainties.”

From a technical standpoint, Toyota Motors (TM) sold off hard at the open yesterday, but recovered sharply and held onto the gains the entire day.  This may have been a final flush of selling at least in the short term, setting up a rally over the next few weeks but significant weakness remains in the stock.  It’s probably getting close to a bottom, but it has much technical damage to work through so too early for me to think about a long term position at this point. 


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