Honda Motor Co. (HMC) - Bull of the Day

Honda Motor Company (HMC) is expanding its business in Asia, growing its global network to increase efficiency, and introducing new products to satisfy local markets. Furthermore, capacity expansion across the world inspires optimism about Honda's future prospects.

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.
 
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