See Results Before Buying Sony

We believe Sony (SNE - Analyst Report) will continue to struggle as it faces competition from innovative digital products and increasing competition from low-cost Asian manufacturers as the consumer market slows. Although improvements in PS3 operations helped Sony report improved Q4 results, the company guided down 2008 expectations due to a strong Yen.

We would be hesitant to own shares of a consumer focused company, and maintain a Sell recommendation on Sony shares with a price target of $42.50. Sony is currently trading at 18.4x our estimated fiscal 2008 EPADR. Given the intense competition, sluggish consumer environment, and strong yen appreciation, we are cautious on SNE's outlook.

Although Sony maintains strong distribution channels and a brand name, we would avoid the stock until the company demonstrates sustainable improvements in results. We, therefore, maintain a Sell recommendation on the stock and lower our six-month price target to $42.50. This reflects a P/E multiple of approximately 15.5x our estimated fiscal 2008 EPADR of $2.75, which we believe is a reasonable valuation for a company in Sony's position.

Read the full analyst report on SNE.