BofA Securities has issued a downgrade for Nissan (OTC:) Motor Co Ltd (7201: JP) (OTC: NSANY), transferring its inventory ranking from Purchase to Underperform.
The agency additionally diminished the worth goal to JPY370.00 from the earlier JPY640.00. The downgrade is attributed to a mixture of things negatively impacting the automaker’s prospects.
BofA Securities outlined a number of causes for the downgrade, together with elevated competitors in the USA and a worsening gross sales atmosphere in Europe.
Moreover, there was little indication of a gross sales rebound within the Chinese language market. The agency additionally famous that Nissan lacks new fashions that might probably drive earnings as much as the fiscal yr ending March 2027.
One other issue influencing the downgrade is the diminished chance of extra share buybacks from Renault (EPA:), which had beforehand supported the Purchase ranking.
With these issues, BofA Securities adjusted their worth goal, transferring away from a sum-of-the-parts valuation technique on account of an elevated low cost for Nissan’s automotive enterprise, which they not deem applicable.
The brand new worth goal is predicated on a price-to-book (P/B) ratio, particularly the 0.23x a number of from the fiscal yr ending March 2020, which was a interval of heightened concern over Nissan’s fundamentals. This a number of has been utilized to the agency’s estimate for Nissan’s ebook worth per share for the fiscal yr ending March 2025.
InvestingPro Insights
Amid the downgrade from BofA Securities, Nissan Motor Co Ltd (NSANY) presents a blended monetary image in accordance with InvestingPro information. Nissan’s market capitalization stands at a modest $9.88 billion, reflecting investor sentiment and market situations. The corporate’s Worth/Earnings (P/E) ratio, as of the final twelve months main as much as Q1 2023, is attractively low at 3.57, suggesting that the inventory could also be undervalued relative to its earnings. That is additional emphasised by a Worth/Guide (P/B) ratio of 0.23, indicating that the shares are buying and selling at a major low cost to the corporate’s ebook worth.
InvestingPro Suggestions spotlight some key strategic monetary selections by Nissan’s administration, resembling their aggressive share buyback technique and a historical past of elevating dividends for 3 consecutive years. These actions usually sign administration’s confidence within the firm’s monetary well being and future prospects. Moreover, the corporate’s liquid belongings surpassing short-term obligations suggests a steady monetary place within the close to time period.
For these eager about a extra complete evaluation, InvestingPro provides extra recommendations on Nissan, offering a deeper dive into the corporate’s monetary well being and market efficiency. For additional insights, go to InvestingPro the place 15 extra ideas can be found to information potential funding selections.
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