Honda Maintaining ex-US Growth

Honda Motor Company (HMC - Analyst Report) is expanding its business in Asia, growing its global network to increase efficiency and introducing new products to satisfy local markets.

The company also expects prices to increase and year over year incentives to decline in fiscal 2009, which will push revenues further. In fiscal 2009, Honda expects to sell 4.08 million units in the automobile business; an increase of 155,000 units from fiscal 2008.

Further, capacity expansion plans in Asia and a new sales strategy in Japan inspire optimism about Honda’s future prospects. However, rising raw material prices and selling and administrative (SG&A) expenses are likely to dent margins.

Moreover, unfavorable currency exchange rates, flat-to-lower sales in its key markets such as North America and increased competition will threaten HMC’s global position. Therefore, we maintain our Hold rating with a six-month target price of $24.

Read the full analyst report on HMC

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