Toyota Motor (TM) is the second-largest auto manufacturer in the world after Volkswagen (VLKAY), according to 2016 global auto sales data. In 2008, Toyota became the world’s largest automaker by volume despite being founded much later than other legacy US auto giants (IYK) such as General Motors (GM) and Ford (F).
Analysts’ ratings for Toyota Motor
According to data compiled by Thomson Reuters on September 25, 2017, 38.0% of analysts covering Toyota Motor have recommended a “buy” for the stock. Another 50.0% of them were cautious and suggested a “hold” for the stock, while the remaining 12.0% gave it a “sell.”
As of September 25, 2017, the 12-month consensus target price for Toyota’s ADR (American depositary receipt) was $110.53. That reflects no upside potential from its market price of $120.97. In the last couple of months, analysts’ consensus target price for Toyota has risen from $108.15 to $110.53.
In July 2017, Toyota was the only mainstream automaker to report a year-over-year increase in its US sales. Its August US sales rose 6.8%.
However, Toyota’s fiscal 1Q18 (April 1, 2017, to June 30, 2017) results were disappointing. Despite a 7.0% rise in its global revenues, shrinking profit margins raised investor concerns about future growth. The rising Japanese yen acted as a headwind to Toyota’s 1Q18 profit margins from its key overseas markets, including North America.
Toyota’s management expects currency headwinds to continue in the current fiscal year, which could hurt its profitability. That dismal outlook could be the primary reason why analysts’ consensus price target for Toyota’s ADR doesn’t currently show any upside potential.
Next, we’ll see what analysts are recommending for other auto stocks that didn’t make it on our list of the top five auto stocks.