Analysts are becoming more optimistic toward Toyota Motor Corp. as fears retreat that the world’s biggest automaker is lagging in a shift to electric vehicles.
At least four companies including Nomura Securities Co. and Mizuho Securities Co. raised their price targets for Toyota since the Japanese automaker unveiled details of battery development plans and other technologies last week, according to data compiled by Bloomberg. Nomura raised its price target to 3,100 yen ($22) from 2,650 yen, the highest among analysts covering Toyota, the data show. The stock closed at 2,218.5 yen on Wednesday.
Toyota’s shares had their best week in about seven years in the period to June 16 as the automaker showed a wide range of technologies under development including next-generation batteries such as all-solid-state batteries, or ASSBs. Some analysts see room for the rally to extend as the firm is expected to post record operating profits in the year ending March 2024, helped by recovering production and a boost to its earnings from a weaker yen.
Toyota’s market share in North America, Europe and China is expected to rise as output rebounds while demand for its hybrid vehicles is strong, Nomura analyst Masataka Kunugimoto wrote in a report. Toyota’s June 13 announcement of its EV strategy is easing concerns that it’s lagging rivals in the competition, he said.
“We are surprised by just how much the share price has risen,” wrote Mizuho Securities analysts including Yoshitaka Ishiyama in a report dated June 15. Still, they said the shares are not overvalued and reiterated a “buy” rating, while raising the price target to 2,700 yen from 2,200 yen.
Some analysts remain more cautious on the stock’s outlook, with share prices retreating since hitting more than a one-year high last Thursday.
Macquarie Capital’s James Hong, the only analyst who has a sell-equivalent rating on Toyota, said that ASSBs are expected to “remain a niche market” and that scaling up battery production and lowering costs is more important than commercialization of the product. He also said the market is slow in reflecting deteriorating sales in China and potential pricing competition in the US from the second half of 2023.
--With assistance from Winnie Hsu.