Keeping in Neutral on Nissan

Nissan (NSANY - Analyst Report) has been accelerating its growth and increasing market share with the aid of several successful product launches. The company has various nine new model launches planned for the fiscal 2008.

The current Nissan Value-Up plan targets sale of 4.2 million units by fiscal 2009 and a minimum of 20% return on invested capital. The company's recently announced 5-year plan, GT 2012, focuses on quality leadership, zero-emission vehicles leadership, cost leadership, business and market expansion, and 5% revenue growth on average over 2008-2012.

However, there are concerns about launch costs and the rise of commodity prices. Further, the overall automotive industry environment is a challenging one, with volumes going down. Thus, we rate the stock a Hold with a target price of $18.00.

Additionally, the proposed launch of new vehicles in North America will raise the risk of incentive growth. Keeping the above factors in mind, we believe the stock can move a notch up to trade at a higher P/E multiple, 8.6x our 2009 earnings.

Read the full analyst report on NSANY.