Despite unfavorable currency exchange rates, Honda reported a profit in the second quarter of its fiscal 2011 that was more than double the year-ago level, driven by higher revenues in the Automobile segment. Furthermore, the automaker projected an 86.3% rise in profit to ?500 billion for fiscal 2011.
Therefore, we are upgrading our recommendation on the stock from Underperform to Outperform with a target price of $46. This valuation represents 13.8X our 2011 EPS estimate, well below the peer group average.
HONDA MOTOR (HMC): Free Stock Analysis Report
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