Nissan a Sell in Current Market

Increasing prices of energy and raw material including steel, aluminum and precious metal are eroding profits for Nissan (NSANY - Analyst Report). Moreover, the company is offering higher incentives such as discounts to entice buyers. This is making it difficult for Nissan to pass on the rising raw material and energy prices to the ultimate consumers.

Also, there are concerns about the new product launch costs that the company plans in fiscal 2008. Further, the overall automotive industry environment is a challenging one, with volumes going down. The company anticipates a 29.5% drop in earnings for fiscal 2008. Thus, we rate the stock a Sell with a target price of $15.00.

Currently, Nissan is trading at a P/E multiple of 11.2x our 2009 EPADR estimate of $1.59. We rate the stock a Sell as the company faces a continued challenging environment characterized by higher incentives, higher commodity prices, and raw material shortages.

Additionally, the proposed launch of new vehicles in North America will raise the risk of incentive growth. We believe the stock to trade at a P/E multiple of 9.4x our 2009 earnings. Thus, we have estimated our six-month target price at $15.00.

Read the full analyst report on NSANY